"It was varied, in major part, to reduce demand for our dollar and all the implications that holds."

Not so, the currency has traded above parity for much of the past 18 months, despite a string of seven rate cuts now totaling 2 percentage points, and the latest reduction produced a reduction to just US$1.0178 from about US$1.0240. Since then it is the RISE in the value of the USD that has relatively reduced the AUD to parity and below..

"Commonwealth Bank chief economist Michael Blythe said it appeared recent consumer price index (CPI) figures, which showed inflation remained benign, had prompted the RBA's decision to cut rates".

"Some economists said that if a run of recent negative data continued, the RBA may be forced to cut again."

ALAN KOHLER, Inside Business

Rate "down a bit on Tuesday with the cash rate cut and then all the way back up on Thursday when the unemployment rate fell. And then, crunch on Friday morning - back down almost to parity because the US dollar surged, breaking through 100 yen for the first time in four years, in turn because markets are starting to anticipate the Fed's exit from quantitative easing. "

What we learnt this week is that the Reserve Bank is powerless against foreign exchange markets and all that matters is what other currencies do, especially the US dollar and the yen.