Conversely, it has put upward pressure on the value of other currencies where the need for monetary stimulus has been less, including the Australian dollar. While movements in the value of our own currency remain heavily influenced by changes in commodity prices, the upward pressure on the Australian dollar from developments abroad has complicated the transition of the economy following the mining investment boom.
With our exchange rate higher than it otherwise would have been, domestic demand has been a bit weaker. The Reserve Bank Board has responded to a softer economic outlook by having interest rates lower than otherwise. The easier monetary policy in Australia has supported the domestic economy.