The Australian dollar could be getting ahead of itself, the Reserve Bank boss warns.
And RBA governor Glenn Stevens says talking the Australian dollar down is "absolutely" consistent with a commitment to a freely floating exchange rate.
"There's some risk actually that the currency might be getting a bit ahead of itself," Mr Stevens said on Tuesday following his ASIC Annual Forum speech.
The comments come after the US Treasury criticised the RBA for jawboning the Australian currency.
The US executive director on the International Monetary Funds's executive board made the complaint during a review of the Australian economy last September.
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The US expressed concern at the RBA's currency commentary, suggesting it went against the spirit of free-floating exchange rates.
Leading up to the time of the statement, RBA officials had repeatedly referred to the Aussie dollar's stubbornly high exchange rate despite falling commodity prices, and its need to fall to help stimulate economic growth.
Speaking on Tuesday, Mr Stevens said making observations about whether the Aussie is undervalued or overvalued is not out of line.
"We haven't done a dollar intervention in this whole episode, and occasionally we have an opinion about the market price, which is not that unknown in central banking circles," he said.
Mr Stevens was also asked how a zero-interest rate policy, similar to the one adopted by the US for several years, fits into having a market-determined exchange rate.
"That's a question you could pose to those countries that have zero rates," he said.
The central banker said the greenback has recently slumped against many currencies, while commodity prices have also risen, which has helped push the Aussie sharply higher.
But he said given the broader downward spiral in resource prices and the US Federal Reserve's projected rate hike schedule, the exchange rate shouldn't get much stronger.
"It's pretty hard to find central banks that would prefer higher rather than lower (currencies) anywhere in the world at the moment," he said.
"The reason for that simply is that nobody feels there's enough aggregate demand globally."
