Reserve Bank of Australia
From The Free Forex Encyclopedia
The Reserve Bank of Australia's (RBA) main responsibility is monetary policy. Policy decisions are made by the Reserve Bank Board, with the objective of achieving low and stable inflation over the medium term.
The Reserve Bank of Australia is the institution responsible for managing Australian currency policies. The Reserve Bank was founded in 1911, but achieved its present form in 1960 when the bank’s function shifted toward regulation and away from commercial banking.
The Reserve Bank of Australia, like many central banks, has the power to increase or decrease the money supply in Australia. Unlike the US Federal Reserve, the Reserve Bank of Australia prints and destroys money directly, rather than working with other government institutions. The Reserve Bank also buys and sells treasury bonds to primary traders, which raises money for government operations as well as pumping money into the economy (or removing an excess of money) at critical junctures. The Reserve Bank also has the power to regulate nationwide interest rates, as well as to adjust the asset holdings of individual commercial banks, meaning that this Reserve Bank plays a heavy role in Australian financial affairs.
The Reserve Bank of Australia also publishes a number of reports on both a monthly and an annual basis. Traders in the Australian currency market consider these reports extremely accurate and useful in developing an idea of the state of the Australian economy at any point in time.
Since trade balances depend on a nation’s money supply, the Reserve Bank of Australia’s actions play a large role in determining the behavior of the Australian currency market, a fact which many foreign exchange traders take advantage of by closely watching the Reserve Bank’s actions and taking appropriate actions.