Australian Dollar Falls
The dollar fell below 70 cents US last week, down from a high of 80 cents in February. The local currency touched a low of 69.07 cents US – a
level not reached since early November last year. Currently, the official US cash rate is at a 46-year low of one per cent, compared to Australia’s cash rate of 5.25 per cent.According to currency experts it is the interest rate difference between the two that helped the Australian dollar climb to its February highs.
With a strong prospect of that gap narrowing the Australian dollar has dropped lower to what may be considered more sustainable levels. While the falling value of the Australian currency is providing some cheer to exporting farmers, it may not be all good news.
A cheaper dollar and high oil prices is a potent
inflationary mix, which the Reserve Bank might manage through higher interest rates.The RBA said on Friday that it was more likely that the rates differential will narrow, rather than widen. Economists warn that if the US
economy continues to pick up the dollar could drop as low as 60 cents, but it is more likely to slowly drift back to around the mid 60s.Excerpt from N.Whittakers Newsletter
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorInteresting article, but the heat seems to of gone out of RE for the time being so I don’t see us getting many rate rises, and also we have one of the higherst rates in the developed world so I question how much further it can actually go. Lastly while oil might be high, in real terms it’s $15 less than the oil rises in 1990 (p73, May 8th-14th, The Economist) and the Economist suggested it might be a short term price rise, and when things stabalise in Saudi (Not Iraq, but Saudi), prices will again fall from their curent highs.
Rgds.
Lucifer_au
You must be logged in to reply to this topic. If you don't have an account, you can register here.
