(13 November 2026 – Australia) As the Australian Dollar (AUD) depreciates sharply the Reserve Bank of Australia (RBA) faces a difficulty challenge managing rising inflation despite hiking interest rates to their highest level in two decades.
The AUD/USD is trading around 68.50 having slid to as low as 68.42 this week, a seven-month low, after a senior US Federal Reserve official warned that a major interest rate increase is possible next month should inflation in the United States remain elevated.
The latest CommBank FX Barometer shows Australian corporates and money managers are both leaning into currency risk management, even as their strategies diverge. Money managers are looking for more offshore exposure without necessarily taking on more unhedged currency risk, while corporates are holding firm on protection amid a still-uncertain global backdrop.
The October research, based on direct interviews with 136 money managers by East & Partners, split across super funds, insurers and investment managers, found 3 in 4 expect their FX exposure to increase over the next quarter, while 9 in 10 plan to raise their hedge ratios.
Not one of the 136 respondents planned to cut their hedge ratio. Foreign assets remain core to how Australian institutions generate returns, with the average foreign share of assets under management sitting at 33 percent across the three investor types, led by investment managers at 41 percent.
“It certainly pushes the RBA in a certain direction, which is to hike. A weaker Aussie does not help the RBA because of higher imported inflation. But I probably wouldn’t say it will force the RBA to hike … but it’s certainly uncomfortable” commented CommBank Head of FX and International Economics, Joseph Capurso.
“The market is not taking Waller’s comments too seriously, but it is flirting with the idea of a 50-basis point move from the Fed in December. If the Aussie dollar is under pressure because of what other central banks, particularly the Fed, are doing, that argues that the RBA may have to go again” said NAB Head of FX Strategy, Ray Attrill.