And so it was that in the 1980s, the floating exchange rate absorbed the shock of our economy's increasing openness. Over the two years to January 1987, the Australian dollar depreciated by around a third on a trade-weighted basis. At the time, that depreciation was sobering. I remember our lecturers telling us economics students that it meant our living standards had declined.
In the foreign exchange market, the yen appreciated toward mid-July as foreign investors kept on investing in Japanese stocks, but it fell back as the dollar was purchased reflecting expectations for a recovery in the U.S. economy. The yen is currently traded in the range of 119-121 yen to the U.S. dollar.