13 Dec 2013

Stevens wants lower $A

10:50 am on 13 December 2013

Reserve Bank of Australia governor Glenn Stevens says he wouild prefer a fall in the value of the Australian dollar over lower interest rates as a means to lift the domestic economy.

Mr Stevens told The Australian Financial Review on Friday he would like a dollar closer to 85 US cents to help stimulate trade-exposed sectors of the economy.

AAP reports the Australian dollar was trading at 90.31 US cents on Thursday - down from 91.31 US cents on Wednesday - and given the falling terms of trade, Mr Stevens hopes it continues to move lower.

"To the extent that we get some more easing in financial conditions, at this point it's probably more preferable for that to be via a lower currency at the margin than lower interest rates," he said.

"I thought (US)85 would be closer to the mark than (US)95."

In the wake of Holden's announcement it will quit production in Australia by the end of 2017, Mr Stevens said the car industry faced more challenges than just the exchange rate.

However, Mr Stevens added he believes manufacturing has a future in Australia.