Reserve Bank boss Glenn Stevens' wish for the Australian dollar to fall has finally been realised.
The dollar tumbled half a cent on Thursday after Mr Stevens said it was overvalued and flagged that interest rates, already at record lows, could fall even further.
In a speech in Hobart, Mr Stevens was unusually blunt in saying the stubbornly high dollar is hurting the economy.
"Most measurements would say it is overvalued, and not by just a few cents," he said.
"There is little doubt that significant parts of the trade-exposed sectors still find it quite uncomfortable."
He also hosed down speculation that he is considering an interest rate hike.
The bank's ultimate weapon to lower the Australian dollar would be to cut the cash rate, but Mr Stevens said he is not inclined to move the rate for some time yet - a stance he has held since the beginning of 2014.
In recent months almost all market economists have removed cash rate cuts from their forecasts and instead started predicting increases.
"People may react by thinking that, if the bank is not thinking about easing, then it must be thinking about tightening. But we were not contemplating tightening," Mr Stevens said.
With the cash rate at 2.5 per cent, the RBA governor said the central bank has plenty of "ammunition" to cut it further, unlike other countries whose rates are at or near zero.
Currency traders reacted by pushing the dollar down to 93.80 US cents from 94.31 US cents within minutes of Mr Stevens' comments.
It continued falling during the afternoon, dropping to low as 93.7 US cents.
JP Morgan chief economist Stephen Walters said it was the most important communication from the central bank for some time.
"It changed the tone of the official discourse on the high Australian dollar, which is causing discomfort again, and punched a hole in the case for early rate hikes," he said.
"He is talking about rate cuts, not hikes; he appeared to endorse market pricing implying a near term rate cut is more likely than a hike."
TD Securities' Asia-Pacific macro strategist Prashant Newnaha was surprised that the governor did not make the comments after the RBA's board meeting on interest rates on Tuesday.
"It's been the first time in a while that the RBA has been so direct on what it thinks on the Australian dollar," he said.
Mr Newnaha said TD Securities had been predicting a rate hike in the first months of 2015, but now believes the RBA could keep the cash rate unchanged for longer.
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