The article explores the factors influencing the Australian/US dollar exchange rate using econometric models. The researchers found that asset market variables and price disturbances play a significant role in exchange rate volatility. Unanticipated changes in prices, money, and the current account can cause the exchange rate to deviate from its trend and then return to equilibrium. The study suggests that economic fundamentals may not fully explain short-term exchange rate fluctuations compared to a random walk model. The models accurately predict exchange rate movements within a specific time frame but are less reliable for out-of-sample forecasts.