The RBA must act on the dollar The Reserve Bank has no choice but to join the currency debasement contest that's now going on around the world, and to cut rates by another 1% in the coming 12 months. The Reserve Bank has no choice but to join the currency debasement contest that's now going on around the world, and to cut rates by another 1% in the coming 12 months? -- ?including 0.5% by the end of the year. The Australian dollar is in a "no-lose" situation: when Western central banks launch asset-buying programs, as the central banks of the US, Europe, UK and Japan have all done lately, the "risk-on" environment sees the Aussie rise as a result of fund buying; but Australia's AAA status and relatively high yield makes it a preferred safe haven as well, especially for other central banks. Last week the RBA published a list of 16 global central banks that have been buying Australian dollars as part of their diversification strategy, including Russia, Brazil, Korea and Switzerland. On Thursday the Philippines was added to the list. The result is that as the Chinese economy slows, commodity prices fall and with them Australia's terms of trade, while the exchange rate has remained stubbornly above 104 US cents. In other words, the dollar's unique status as risk asset for hedge funds and safe haven for central banks means that it is no longer doing its usual job of buffering the Australian economy from an Asian