The Commonwealth Bank has warned that the current global banking crisis could push the Australian dollar below US60c,
“We do not want to be alarmist,” said Kristina Clifton, senior CBA economist, “but the Australian dollar can fall below US60c in a worst-case scenario.”
The Australian dollar sat just above US67c at the open of markets this morning. The last time it plunged below US60c was in April 2020, at the height of the pandemic.
Clifton stressed that should the dollar fall below the magic 60c mark, the central banks and governments would move to restore it.
This comes as the Reserve Bank of Australia assistant governor Chris Kent assured Australians our banks are “unquestionably strong” and will be able to weather a prolonged period of market upheaval.
“Conditions in global bond markets have been strained recently following the failure of Silicon Valley Bank in the United States,” Kent said at a speech to the KangaNews Debt Capital Market Summit in Sydney this morning.
“Volatility in Australian financial markets has picked up but markets are still functioning and, most importantly, Australian banks are unquestionably strong – the banks’ capital and liquidity positions are well above APRA’s regulatory requirements.
“Banks are already well advanced on their bond issuance plans for the year and could defer their bond issuance for a while. Even if markets remain strained for a time, Australian banks’ issuance will continue to benefit from the strength of their balance sheets.”
