The Australian dollar (AUD) is continuing to fall against the USD this week, as quantative easing in Europe helps to push the USD higher. Conservative estimates put the lower ranges that the AUD could reach at around US70c, one of the lowest levels for the currency in the last 10 years.
Reasons of downfall
The reasons behind this tumble are many and varied, but the bulk of the drop has been caused by the tumbling commodities prices and the weakening construction industry in China. Due to these factors the RBA has seen fit to reduce rates and target an even lower level for the AUD than we are currently seeing.
Falling commodity prices and the slowdown of the Chinese economy have meant that for the Australian economy to rebound, it can no longer support a high dollar value for the AUD. It is the hope of the RBA that the lower Australian dollar will help a flagging export industry and revive the current economic prospects of the nation.
Falling of AUD Continues
The collapse of the mining boom in Australia has added greatly to the current need to see a lower value for the AUD, with the industry that has helped Australia weather global economic troubled times with little negative now looking like it is in trouble.
Key industry figures in currency trading have pegged the AUD to keep falling on the back of the aforementioned Chinese slow down and mining industry troubles. Bank of America economist Saul Elsake tipped that the AUD could even go as low as US68c by the end of 2016.
The AUD Continues, the currency of the Commonwealth of Australia, has in recent times enjoyed quite a strong showing of value in the global currency markets. In particular it has always had a strong showing against the NZD. However recent events have seen the NZD performing very strongly, with the AUD reaching the lowest levels seen agains the NZD since New Zealand dollar was floated in 1985.
The AUD Continues falling will have a mixed effect worldwide. For the Australian export market and tourists visiting Australia, the lower AUD will be of great benefit. For Australians travelling worldwide or for those who import products for sale, this could have a very serious impact on business viability.
The biggest winners will be Australian companies who generate significant revenue overseas, as they get an immediate bump in profits bringing that revenue back home. Companies such as Westfield Corp LTD, who report their income in US dollars, will benefit greatly on their balance books by this change in fate for the AUD.
