The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Monday, July 23, 2012

Ricardian Ambivalence attacks biased reporting on Aussie dollar

A good note my from my buddy the rates strategist over at Ricardian Ambivalence, who claims that there is biased coverage of the currency movements--in a typically negative direction--here:

The reporting of recent AUD strength is getting a little unbalanced. See here for an example.

This tone really gets to me. Movements in the foreign exchange value of the AUD (like movements in any relative price) create winners and losers. A stronger AUD typically will create losers among those who sell in foreign currency terms (a given amount of foreign exchange buys less AUD), and winners among those who are buyers in foreign currency terms (their AUD buys more foreign exchange).

The vast majority of Australians are consumers and the increase in the AUD has been the primary means by which their standard of living has been raised by the mining boom (fuel would be over A$2.5 per litre if the AUD was ~0.50, for example).