Only those flows needed to pay for the operations in Australia, to pay dividends to the Australian shareholder base and taxes to the Australian Government will result in purchases of Australian dollars. The net result of all of this is that we might expect to see reduced capital flows and reduced demand for Australian dollars as the resources sector moves into the production phase.
Of key interest to central bankers is the question as to how shocks – including unexpected changes in incomes, interest rates and asset prices – are transmitted in the overall economy.