Australian dollar: higher or lower?

From the RBA Statement on Monetary Policy:

Another factor influencing the outlook for Australia is the exchange rate. Since the August Statement, the Australian dollar has appreciated by around 6 per cent on a trade-weighted basis, to be 45 per cent above its trough in late 2008 and at its highest level in real terms in the post-float period (Graph 90). The appreciation that has taken place over recent years has had a dampening effect on some sectors of the economy, particularly in import-competing and export-oriented industries such as manufacturing, farming, tourism and education. However, the appreciation has occurred in the context of strong global demand for Australia’s resource exports and the significant interest rate differential with the major advanced economies. If developments in global financial markets resulted in a significant further appreciation that was unrelated to these factors, it would likely result in both growth and inflation being lower than in the central forecast.

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