why is the $A depreciating? (1 Viewer)

[Enteebee]

It's not necessarily bad for our dollar to depreciate during hard times as it does... it means that we have less imports and further capability for exports to basically pull us out of it.

 

[tau281290]

It's not necessarily bad for our dollar to depreciate during hard times as it does... it means that we have less imports and further capability for exports to basically pull us out of it.

No one said it is bad, but for most HSC STUDENTS are bad because we are travellling overseas after the exams. =P I still haven't exchanged my currencies...yet

 

[BackCountrySnow]

Yes our interest rates are quite high comparatively, but it also means it can fall quite fast, adding to the depreciation on the $A.

The bank deposit guarantee is not just in Australia, other countries have introduced them, including Hong Kong and Germany.

but as a general rule of thumb, higher interest rates will cause an appreciation. Also, note that the Australian dollar started depreciating before rate cuts.

 

[Enteebee]

No one said it is bad, but for most HSC STUDENTS are bad because we are travellling overseas after the exams. =P I still haven't exchanged my currencies...yet

yeah it's what youBROKEmyLIFE was implying with his fiat currency point, at least i think so...

 

[tau281290]

yeah it's what youBROKEmyLIFE was implying with his fiat currency point, at least i think so...

He was just stealing the idea off a SMH article today, nothing major.

Your avatar looks awesome x)

but as a general rule of thumb, higher interest rates will cause an appreciation. Also, note that the Australian dollar started depreciating before rate cuts.

Yes, that's why when we cut our rates again in Nov, speculators are going to pull out their $A again. This will depreciate the $A for a short period, it is going to stabilise again anyway.

 

[jacobkhoury]

America is now in a recession. They are our major trading partners so the volatility of their market and shares will ultimately affect our dollar. Also , there isn't much expenditure within our economy atm, which devalues the dollar. However, the lower our dollar, the more internationally competitive we will be.

 

[humanities]

wasnt china recently annoucned as our major 2 way trading partner.

 

[Q2C-ME]

America is now in a recession. They are our major trading partners so the volatility of their market and shares will ultimately affect our dollar. Also , there isn't much expenditure within our economy atm, which devalues the dollar. However, the lower our dollar, the more internationally competitive we will be.

kinda...but not really

 

[michael1990]

wasnt china recently annoucned as our major 2 way trading partner.

Was listening to a thing with someone from China.
They have 2 TRILLION! dollars in safe keeping to help them out of this turmoil. I was like wow, 2 trillion dollars. The guy said but we are in no position to help the global economy.

 

[tau281290]

Chinese population is pretty huge, so dividing that per capita is probably not much.

 

[BackCountrySnow]

America is now in a recession. They are our major trading partners so the volatility of their market and shares will ultimately affect our dollar. Also , there isn't much expenditure within our economy atm, which devalues the dollar. However, the lower our dollar, the more internationally competitive we will be.

No. when we refer to the value of the Australian we are really saying the $A/$US. So a recession in the US would appreciate the Australian dollar assuming all other variables remain constant.

 

[Q2C-ME]

correct

furthermore...that whole expenditure thing you were saying is not true....its to indrect...like your making several assumptions that capital expenditure will reduce consumption yea true....but lyk just because its reducing import consumption, it means its reducing domestic consumption to which means reduced business profitibaility, which is evident in the recent NAB sensis.

 

[moll.]

wasnt china recently annoucned as our major 2 way trading partner.

Yeah.
And the EU, Japan and ASEAN are all bigger trading partners than America.

 

[moll.]

It's all speculative trading by greedy jew bankers.

I thought it was a plot by the combined power of al-Qaeda and Jemaah Islamiyah in their new satanic anti-bogan alliance.

 

[BackCountrySnow]

It's all speculative trading by greedy jew bankers.

anyone else noticed how nearly all well-known economists are jews?

 

[moll.]

anyone else noticed how nearly all well-known economists are jews?

President Jebediah Bartlet isn't a Jew.

 

[Q2C-ME]

ricardo...the guy that made the ricardo model about protectionist polices is not jew.

also some paki guy made one of the human index's....with a stuffed up country like his...go figure

 

[L]

lolwut?

doing it wrong

 

[seano77]

China export to USA. USA don't want China's stuff anymore (slowing demand). Even though China will continue to industrialise, they will slow their supply which means they need less of our coal + iron ore etc. Therefore less exports for us Aussies means less money being converted into $A. Also growth is expected to slow and interest rates are expected to become more expansionary.

 

[2162]

Well, first of all.

Australian interest rates going down subsequently as a result of a slowing economy, namely falls in commodity prices. Thus future commodity contracts having a lower value and a revised economic growth estimate.

1% decrease made investors leave the australian bond market and some investors withdrew from countries with a high CAD e.g. australia thus withdrawing from australian equity.

Japanese investors sold australian dollars in order to unyield their exchange rate speculation, this is manifest through australia losing about 50% to the JPY. Also investors are going into JPY because it is seen as the safest currencies as a result of their consistent trade surpluses.

Furthermore with declining commodity and oil prices we have seen the mining/commodity economies i.e. brasil, canada and Australia have their currencies slip against most currencies as a result of revised estimates for global economic growth and thus the price of commodities.

With the USA going down, we also have seen china revise it's economic growth from 10.8% to 9.4% thus decreased demand for commodities.

Also australia has slipped relative to the USA because the risk of investment is a lot lower due to the transperency and liquidity of usa bonds.

One would think that declining AD and a faltering financial sector in the USA that prompts huge monetary printing response would devalue the USD however don't forget the fact that the USD is seen as a reserve currency and easily transformed into another, namely the JPY and this can be seen with the USD's consequent decline against the JPY by about 10%. Until the USA stops producing technology it's economy won't go into depression.

There is also the fact that currencies are like sandbags and that they dont spread out. This can be seen with a lot of currencies 're-adjusting' I dare say, and moving all over the place against each other.

Don't forget that the AUD is near its trough as most investors are trying to salvage their portfolios rather than make informed decisions.

I think i/r differential, investor confidence in australia's CAD and commodities are the most prevalent factors in the depreciation of the australian dollar.