Both market interest rates and the exchange rate moved down in response, helping to stimulate foreign and domestic demand and so moderate the effects of fiscal restraint on economic activity. For all these reasons, a flexible exchange rate has an important role to play in an open economy like Canada’s.
In particular, I want to deal with three questions that often come up when I talk to analysts and bankers from overseas. These are:   are Australian households over-geared?   does Australia have too much foreign debt? and    do Australian banks rely too much on foreign wholesale funding?