This includes foreign entities issuing Kangaroo bonds in Australian dollars to fund their assets offshore and Australian investors who hedge their foreign currency assets. [1] While the flows are large in both directions, demand and supply are brought in balance in the swap market with those demanding Australian dollars typically paying a small premium.
However, over the past year there have been some sizeable changes in the market for Australian dollar swaps. The Reserve Bank's policy actions have played a part here by providing plenty of Australian dollar liquidity. For example, to date the Reserve Bank has provided Australian banks with $ billion of low-cost funding for terms of 3 years via the Term Funding Facility.