BIS central bankers’ speeches  3  In the decade prior to moving to a freely floating currency in 1983, Australia had been through almost all other forms of exchange rate regimes: a peg to the US dollar (as part of the Bretton Woods exchange rate regime); a peg to a trade-weighted basket; and an adjustable peg, where the frequency of adjustment increased substantially up until the time of the float.
Both capital inflows and outflows increased substantially following the float in 1983 (Graph 1). The benefits of the floating exchange rate in assisting the Australian economy to respond to shocks are documented extensively elsewhere, as are the benefits in allowing greater independence of domestic monetary policy settings.