The Australian dollar has stumbled after a central bank official said intervention to lower the currency had not been ruled out.
The Australian dollar fell from 87.27 US cents to hit a low of 86.73 US cents at 1338 AEDT when RBA assistant governor Christopher Kent said intervention to lower the "too high" exchange rate was still an option.
"We haven't ruled it out," Dr Kent told a business lunch on Thursday.
"It's still there as an option, if needed."
ANZ economist Felicity Emmett said the comments were "not surprising".
"We don't, however, see this as a strong possibility," she said.
"The RBA has previously highlighted that successful intervention occurs when market dysfunction has removed liquidity or when valuation is at an extreme. We are not at this point now."
Dr Kent said the currency remained "above most estimates of its fundamental value, particularly given the substantial declines in commodity prices over the course of this year".
The Australian dollar recovered some ground later on Thursday, lifting back above 87 US cents.
Dr Kent also said measures being considering to curb investor activity in the housing market would be "modest".
"It's always possible in any field that you can make policy mistakes," he said.
"In this case, what has been said quite clearly by APRA (the Australian Prudential Regulation Authority) and others in the bank that are experts on this, is that the sorts of steps being considered are modest ones in a direction, a path, that's already been taken in gradually tightening lending conditions sufficiently."
Dr Kent also acknowledged recent problems with official labour force figures, and said the RBA was always cautious about reading too much into one particular economic indicator.
Other labour market indicators were suggesting a pickup, he said.
"There are some indications that at least employment and the prospects of future employment have improved, including things like the various measures of job vacancies and job ads, which have turned higher," he said.
"They're not particularly strong, but that's positive and encouraging."
