The Australian dollar has played an important countercyclical role by rising and falling in response to various external events that otherwise might have had the potential to destabilise the domestic economy. This was evident both during the Asian crisis and the dot-com bubble, when the Australian dollar fell sharply in response to deteriorating economic conditions abroad, helping to insulate the domestic economy.
1  That period, however, was broken by consecutive quarters of negative growth in December 1971 and March 1972. 2  BIS Review 108/2010  Evidence of the role played by the exchange rate in stabilising the economy can also be seen in recent years.