\n RBA's Glenn Stevens warns on Aussie dollar, Sydney house prices \n If there were any doubts about the Reserve Bank's discomfort about the stubborn strength of the Australian dollar, governor Glenn Stevens removed them when he addressed the Australian Conference of Economists on Thursday. The reserve was describing the $A as uncomfortably high late last year when the currency was around 91.2 US cents. It hasn't been using that description lately, even though the $A is higher. Stevens said in Hobart that the central bank modified its language to reflect a fall in the value of the $A after its December comments, to a low of 86.68 US cents on January 24. It adjusted its language again as the currency retraced some of the fall, he said, adding that while there seemed to be a strong focus on "whether the adjective 'uncomfortable' would be put into use once more," he didn't regard that as significant. Then he added: "lest there be any uncertainty about this, let me be clear, again, that the exchange rate remains high by historical standards. "There is little doubt that significant parts of the trade-exposed sectors still find it quite 'uncomfortable': it continues to exert acute pressure for cost containment, productivity improvement and business model change. "When judged against current and likely future trends in the terms of trade, and Australia's still high costs of production relative to those elsewhere in the world, most measurements would say it is overvalued, and not by just a few cents." Stevens concluded by saying that the currency was being affected by the fact that interest rates were even lower overseas. There is still a profitable "carry trade" from those economies to here, and the trade is pushing the value of the $A up. "Nonetheless, we think that investors are underestimating the likelihood of a significant fall in the Australian dollar at some point," he said. He couldn't have been clearer than that, and the Australian dollar not surprisingly fell on his words, from around 94.4 US cents to 93.8 US cents. The problem of course is that it is not at all clear what the Reserve can do about the strength of the $A. As Stevens observed, interest rates are even lower overseas. This country is therefore attracting capital, and that drives the $A up. Direct intervention against foreign exchange currency flows is unlikely to produce any meaningful change in the trend. The Reserve can pull the rug out from under the $A of course if it cut its cash rate, but that doesn't fit with its overall view of an economy that is slowly but successfully moving from the fading resources boom to a more balanced mix of activity. It said as much on Tuesday when it left its cash rate at 2.5 per cent, and said as it has been saying all year that rates are in ''a period of stability". Stevens is right that the currency is overvalued, and right that it will eventually fall to reflect the retreat of the once-in-a-lifetime commodity price boom and resources investment surge. It doesn't look likely to do so soon, however.