The Australian dollar’s sharp rise in October made a mess of our resources boom.
The Reserve Bank reported yesterday that the preliminary estimates for October indicate that the index fell by 2.9% in October, "with the appreciation of the exchange rate’ as the RBA put it.
That was the first fall in some months, and one of the largest monthly falls in the past year or so.
The Index remains well under the record levels of mid 2008 to early 2009 when the Australian dollar was significantly weaker, down to around 60 USc at one stage.
It touched $US1.003 briefly mid way through October and ended around 978.50 in Sydney last night ahead of today’s RBA board meeting.
There was a fall also of 1.1% (on a monthly average basis) in SDR terms, after falling 0.9% in September (revised).
The RBA said the "largest contributors to the fall in October were declines in the estimated export prices of iron ore and coal, reflecting lower contract prices for the December quarter.
"The prices of gold, oil and aluminium rose in the month.
"Over the past year, the index has risen by 46 per cent in SDR terms.
"Much of this rise has been due to increases in iron ore, coking coal and thermal coal export prices, although all components of the index increased over this period.
"With the appreciation of the exchange rate over the year, the index rose by 33 per cent in Australian dollar terms.
"As indicated in previous releases, preliminary estimates for iron ore, coking coal and thermal coal export prices are being used for recent months, based on market information."
