what good is a trade surplus??? it means you have produced a whole heap of products and you havent been paid for them.
of course a floating exchange rate eliminates the problem anyway
http://www.megainvestments.com.auExtensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
what good is a trade surplus??? it means you have produced a whole heap of products and you havent been paid for them.Actually no, when you have a current account surplus other countries pay you interest on the difference. Not ideal, but better than paying interest to someone else. The ideal is to have neither a deficit or a suplus.
of course a floating exchange rate eliminates the problem anywayYes, the market (eventually) punishes countries that run huge current account deficits by devaluing their currency. The only thing keeping the AUD strong is record high commodity prices and a weak greenback.
“The only thing keeping the AUD strong is record high commodity prices and a weak greenback.”
Yes it is a common misperception that Australian exports are primarily commodities. The currency does tend to trade in line with that sentiment though, demonstrated by the embarassingly low levels we saw a few years back when commodities were out of favour, tech stocks were in, and the world wiped the floor with the poor AUD to the tune of about 48c. It certainly was a victim of a strong USD. In 2002, Mining comprised about 25% of Aussie exports, virtually the same as manufactured exports. A further 20% was attributed to Services. The great news is that mining and agriculture combined did not even constitute half of our exports. But if someone knocks on the door and wants to pay a decent price for commodities, why deny them? It’s all extra money in the pot.
http://www.megainvestments.com.au
Extensive list of ‘Off The Plan’ property available for sale in Perth.
John – 0419 198 856
But when commodity prices are strong all the other exporters in Australia suffer.
Why should a manufacturer who is exporting a globally competitive product have his profit margin slashed (or worse go out of business) because the price of copper is high?
That’s what happens in Australia because like it or not the global markets see us as a quarry and a farm.
You must be logged in to reply to this topic. If you don't have an account, you can register here.
