International Monetary System
Member of the IMF
The International Monetary Fund (IMF) was conceived at a United Nations (UN) conference in Bretton Woods, New Hampshire, in 1944. The IMF’s primary responsibility is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. Created in 1945, the IMF is governed by and accountable to the 188 countries that make up its near-global membership. Australia officially became a member of the IMF August 05, 1947 (International Monetary Fund, 2015).
From Bretton Woods to a Free Float System
Australia has had many shifts in exchange rate policy over the years before it eventually …show more content…
288). When Australia decided to float its exchange rate, things started looking up. This change helped the country in many different ways. One way in particular that Australia benefitted from this change was creating an economy that could better absorb external shocks from the outside world. Most major shifts in trade are well absorbed and do not cause any drastic inflation or deflation to the Australian economy. This change has also allowed the Reserve Bank of Australia (RBA) to set monetary policy that best suits domestic economic conditions (Reserve Bank of Australia, …show more content…
This recent slowdown in exports is very similar to the slowdown in exports in the 1970’s and 1980’s. The commodity prices and high exchange rates are what drive the competitiveness of the country’s resource and non-resource exporters over the last 10 years (Atkin & Connolly, 2013). The high exchange price, paired with the low-cost competitors in Asia, drive down the exports of the country because other countries want the cheapest import options, which are coming from Asia.
Atkin and Connelly of the RBA say this regarding real exchange rates:
When the real exchange rate was at low levels in the mid-1990s and the early 2000s, the export outlook was relatively positive. In contrast, when the real exchange rate was high in the mid-1970s and again in recent years, manufacturers have been pessimistic about the export outlook. (Atkin & Connolly, 2013)
While the manufactured export growth remains relatively low, other areas of exports seem to be growing despite the high exchange rates: professional and scientific equipment and specialized machinery and equipment. It appears as though the more highly-skilled manufactured exports have better success in periods of high exchange
Member of the IMF
The International Monetary Fund (IMF) was conceived at a United Nations (UN) conference in Bretton Woods, New Hampshire, in 1944. The IMF’s primary responsibility is to ensure the stability of the international monetary system—the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other. Created in 1945, the IMF is governed by and accountable to the 188 countries that make up its near-global membership. Australia officially became a member of the IMF August 05, 1947 (International Monetary Fund, 2015).
From Bretton Woods to a Free Float System
Australia has had many shifts in exchange rate policy over the years before it eventually …show more content…
288). When Australia decided to float its exchange rate, things started looking up. This change helped the country in many different ways. One way in particular that Australia benefitted from this change was creating an economy that could better absorb external shocks from the outside world. Most major shifts in trade are well absorbed and do not cause any drastic inflation or deflation to the Australian economy. This change has also allowed the Reserve Bank of Australia (RBA) to set monetary policy that best suits domestic economic conditions (Reserve Bank of Australia, …show more content…
This recent slowdown in exports is very similar to the slowdown in exports in the 1970’s and 1980’s. The commodity prices and high exchange rates are what drive the competitiveness of the country’s resource and non-resource exporters over the last 10 years (Atkin & Connolly, 2013). The high exchange price, paired with the low-cost competitors in Asia, drive down the exports of the country because other countries want the cheapest import options, which are coming from Asia.
Atkin and Connelly of the RBA say this regarding real exchange rates:
When the real exchange rate was at low levels in the mid-1990s and the early 2000s, the export outlook was relatively positive. In contrast, when the real exchange rate was high in the mid-1970s and again in recent years, manufacturers have been pessimistic about the export outlook. (Atkin & Connolly, 2013)
While the manufactured export growth remains relatively low, other areas of exports seem to be growing despite the high exchange rates: professional and scientific equipment and specialized machinery and equipment. It appears as though the more highly-skilled manufactured exports have better success in periods of high exchange