Prospects For $ Aust "Encouraging"

Press, Volume CIX, Issue 31987, 14 May 1969, Page 21

Prospects For $ Aust "Encouraging"

(N.Z.Put.-Reuter— Copyright}

LONDON, May 12.

Immediate prospects for the Australian dollar are quite encouraging, but increasing dependence on a net capital inflow, particularly the portfolio component, gives some cause for concern, the “International Currency Review” says today.

The new British economic publication, a bi-monthly, says that one thing that could really rock the Australian dollar would be the launching of a major campaign against overseas investors.

The report says: “Australia’s balance-of -payments is characterised by an habitual deficit on current account (only once in the last 15 years has the current account been in surplus) offset by a net inflow on capital account. “Within this basic balance-of-payments structure there have been some important developments in recent years. “In the first place, since 1964 there has been a marked widening of the current account deficit: in the period 1964-65 to 1967-68 the average annual deficit was 8845 m, whereas in the period 1953-54 to 1963-66 the comparable figure was s2B3m.

"The deterioration hrs, however, been closely matched by the growth in net capital inflow, which, over the

same periods, averaged $775m and $346m.

“This divergence of the current and capital accounts was most marked in 1967-68 when a current deficit of 81058 m was accompanied by a record capital inflow of 81136 m.

‘The result was a national rise in official reserves of 87m, though an offsetting loss of sll3m was incurred because of revaluation of reserves after' - the devaluation of sterling."

The magazine says that the Australian dollar is riding high on a wave of confidence, and with international monetary tensions persisting, this confidence is likely to be sustained.

The “Australian Financial Review” notes with pride that the attention from this magazine is evidence of the growing stature of the Australian dollar as an international currency. “It is in fairly illustrious company in this latest issue,” the review said. (Other currencies surveyed in the issue are the United States dollar, sterling, the mark, French franc and the Netherlands guilder.