Australian Dollar Boom Essay
The Australian dollar gains its highest level in more than five years. In April 2001, the Aussie dollar began the climb from a low of US Dollars 0.479. In July this year, it peaked at US Dollars 0.687. This climb that the Aussie dollar is in is happening due to many factors, some of these factors are internal that happened due internal causes such as: Government policies, Strong Housing cycle.
Or due to external factors which are factors that are caused by policies of countries that are directly related to the Australian economy or global or regional markets
The RBA “Reserve Bank Board” major responsibilities are to determine the banks monetary and banking policies. However, since banks are considered a key player in money exchange within the economy that is due to the facts that majority of businesses and people deposit at banks and so with those deposits, the banks overall behavior can influence the quantity of deposits in the economy and there for the money supply. So the RBA major job is to determine monetary policy for the banks and the overall banking sector.
What monetary policy means is the management by the central bank of liquidity conditions in the economy. That is the price and availability of funding for the economy’s expenditure. The objectives of monetary policies are to contribute stability of the currency, the maintenance of full employment, and the economic prosperity and welfare of the people of Australia.
The long-run objective of monetary policy is to influence the rate of growth in the economy and the level of prices. When the overall economic growth is too fast, this put pressure on prices so the RBA will implement a tightening of monetary policy to slow the economy. But when the economy is experiencing slow growth, the RBA will implement expansionary monetary policy. Read more…