Part of that change is somewhat mechanical given that in both Japan and the euro area policy rates are close to their effective lower bounds. This latest change in Australia's interest differential extends the trend decline that has been underway for five or more years.
Graph 7  Over the past couple of months, the Australian dollar has depreciated by about 4 per cent on the basis of the trade-weighted index (TWI). This largely reflects the effect of the appreciation of the yen and the renminbi, which collectively comprise nearly 40 per cent of the TWI.