Monday, October 18, 2010

Dollar higher than need be: Hockey

Opposition treasury spokesman Joe Hockey says the Australian dollar is higher than it needs.

THE federal opposition denies that it wants the authorities to interfere in the foreign exchange market with the aim of threatening the rate of the Australian dollar.

Treasurer Wayne Swan in a ministerial statement on Monday accused some in the alliance of missing the currency artificially lowered, but opposition treasury spokesman Joe Hockey said this was not the case.

"The alliance has not suggested that the politics or the Reserve Bank should interpose in the currency markets to direct the rate of the Australian dollar," Mr Hockey told parliament in response to the treasurer's statement.

He said the former Howard government had held its heart in early 2001 when the dollar dropped below 50 US cents during the US technology boom.

"We require the authorities to keep its nerve now," Mr Hockey said.

Opposition finance spokesman Andrew Robb last week accused the administration of "just sitting backwards" and letting higher interest rates and a high exchange rate do the play in the absence of any effective reform agenda.

He said such reliance to put the brakes on development in Australia meant that millions of mortgage holders and trade exposed industries were being "strongly squeezed".

"Wayne Swan finds it easier and more easy to . let our high interest rates and exchange rates do all the heavy lifting, all the while avoiding the difficult reforms necessary to restore the economic resilience this Labor government inherited," he said in a statement.

Mr Hockey said the administration should not be running large deficits when the saving is growing, and that this "pump-priming" of the saving is forcing interest rates to be higher than they otherwise would be.

"Consequently, the Australia dollar is higher than it inevitably to be," he said.

"Government spending puts upward force on interest rates and the central rate when the saving is already operating at full capacity."

The dollar briefly broke parity against the US currency late on Friday for the start time since it was floated on the foreign exchange market in December 1983.

The currency subsequently eased back to below 99 US cents on Monday.

Subscribe to: Post Comments (Atom)