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Friday, 9 December 1983
Page: 3602

Senator KILGARIFF —I direct my question to the Minister representing the Treasurer. I refer the Minister to today's Reserve Bank of Australia announcement of the suspension of trading in overseas currencies by Australian banks. What are the reasons behind the Government's decision to take such action ? What is it expected to achieve.

Senator BUTTON —I am not able to answer Senator Kilgariff's question in great detail, but I will answer it as best I can by describing the circumstances leading up to the decision by the Reserve Bank to suspend dealings in foreign exchange. I am advised that there has been a substantial excess of capital inflow into Australia so far in December. Yesterday there was a particularly substantial daily inflow amounting to about $350m and there was an expectation that today's amount could be even greater. In those circumstances the Government is considering its options in relation to capital inflow and the implications that has for economic policy.

The Government took the view, in consultation with the Reserve Bank, that it was unwise to leave the exchanges open today. Today is being used to consult with the Government's advisers on the appropriate response to this current problem. The Government will make a statement at an appropriate time.