Economic and Financial Committee


Cite as

The Commonwealth of Australia

Topic A: Competitive Currency Devaluation

As a net exporter, changes in foreign monetary policies affect the overall Australian economic competitiveness. In August 11th 2015, the yuan devaluated by 1.9%, and the Australian dollar followed the day after in the same amount. This kind of situation is negative for Australia due to the volatility it brings to the economy (management of debt and inflation). In addition, involvement in a competitive devaluation scenario is detrimental for the Reserve Bank of Australia’s main objective: an inflationary rate between 2% and 3%. The Commonwealth of Australia accepts currency devaluation within reasonable bounds, but condemns unjustified currency devaluation with the objective of gaining competitiveness at expen...