Those flows were of course responding to expected returns, but not ones that were affected very much by the interest rate policies in the major economies. In the end it is not possible to come to a definitive assessment on the extent of currency misalignment at the moment, on the basis of standard metrics (and having regard to the statistical imprecision of such metrics).
Having said that, my judgement is that the Australian dollar is currently above levels we would expect to see in the medium term. 6  See Lowe P (2012), “The Changing Structure of the Australian Economy and Monetary Policy”, Address to the Australian Industry Group 12th Annual Economic Forum, Sydney, 7 March. BIS central bankers’ speeches  5  6.