Forex Flash: FDI helps fund Australian account deficit – ANZ

Today’s Q4 BoP data confirm foreign direct investment (FDI) remains the only funding source for Australia’s current account deficit. “In terms of the persistence of these inflows, this is the ninth positive net FDI inflow, an outcome that has not been matched since 1991. We are positioned for a strong AUD via AUD/NZD.” notes Andrew Salter, an FX Strategist at ANZ.

Moreover, it is also particular interesting that the pick-up in net FDI inflows occurred with an increase in FDI excluding both debt financing and equity re-investment, indicating inflows that represent new marginal demand for Australian dollars.