Finally a voice of reason from down under

Australian Treasurer Wayne Swan warned against any efforts to artificially lower the value of the AUD against the USD because it could create hyperinflation in Australia. The AUD reached parity with the USD on Friday for the first time since it was floated in 1983. Swan said efforts to depress the value of the AUD would be counterproductive, driving inflation and interest rates higher, while damaging all sectors of the economy. "Some of us remember well the last time Australia attempted to fix its currency at the same time we were experiencing a terms of trade boom in the mid 1970s. The result was headline inflation rose from around 5% to 17.6% in a little over two years," Swan said. Read the Bloomberg article here.