Insider Monkey – The Reserve Bank of Australia risks provoking market speculators to raise their bets that it will intervene to lower the strong Aussie dollar after it allowed its foreign currency holdings to grow, according to an influential former RBA board member. “It does look as if the RBA is willing to intervene,” Warwick McKibbin said. “But if you are not careful you can add to speculation and the market starts playing the central bank . . . which is what Soros did with the Europeans in the 1990s.”
Mr McKibbin was referring to an episode in 1992 when George Soros challenged the Bank of England’s efforts to keep the British pound within a designated range.
