Knowledge@ASB: Currency Cohesion: Will Parity Put Interest Rates on Hold?

The "magic moment" has arrived. The Australian and the US dollars are now one to one. It's great news for Aussie outbound travellers, but not so good for major export sectors, including resources and education. And this long anticipated parity of the currencies does not seem so magical when the weak state of the US economy is taken into account, says Australian School of Business economist, Peter Swan. Although there may be hidden benefits, he predicts, as the Reserve Bank of Australia now looks set to rest easy on interest rates.