What's your prediction on the Australian Dollar?

[PLANT]

Um what he said...:http://youtu.be/4ZndFBTQCKA

 

[JohnK]

Children? I didn't know you had kids JohnK.

Not quite.

 

[Melburnian1]

Perhaps some of those with expert knowledge of the overall economy can answer. Is the consistent talking down of the $A by RBA officials including the Governor really in Oz's best interests?

Isn't one mark of a 'successful' (in material, not spiritual, terms) nation a 'strong currency?' I'm sure that will be viewed as simplistic - your thoughts please.

 

[vetrade]

Perhaps some of those with expert knowledge of the overall economy can answer. Is the consistent talking down of the $A by RBA officials including the Governor really in Oz's best interests?

Isn't one mark of a 'successful' (in material, not spiritual, terms) nation a 'strong currency?' I'm sure that will be viewed as simplistic - your thoughts please.

The main relevant consideration to your question is that most contracts for the sale of commodities (especially iron ore and coal) stipulate prices in $USD. Australia is heavily reliant on income from mining exports. This is why the current falls in commodity prices are having such a dramatic effect on our budget estimates. The lower the $AUD relative to the $USD the more mining companies get per tonne in AUD terms. Conversely if the AUD gets too high, the miners get less $AUD since they are paid in USD. In this scenario when it comes to new contracts the miners can't set their price higher to compensate for the higher exchange rate because to do so would put them at a competitive disadvantage with other big mining countries like Brazil which is our main competitor in the iron ore market.

A lower dollar is better for our economy but of course most people think it's nice to have a higher dollar as it makes OS travel less expensive; and importers like it higher because it makes OS goods cheaper, to the detriment of local manufacturers.

 

[codash1099]

A lower dollar is better for our economy but of course most people think it's nice to have a higher dollar as it makes OS travel less expensive; and importers like it higher because it makes OS goods cheaper, to the detriment of local manufacturers.

Who or what are they?

 

[PLANT]

81... 81 do I hear 80.....79 yes let's really get moving now....

 

[cove]

We still manufacture in Australia. Now I can smile about that.
Every time we buy to cover our imports we feel like we are donkeys then a week later it was a guru type of decision. There is very little to support our currency at the moment. Interest rates did not help Mr Putin in Russia.
If our currency falls a lot more it will reposition our wage rates so they are no longer out of all proportion with the world.
At 0.81 it is still pretty high.

 

[dajop]

Lots of drama about the AUD falling but the biggest impact in the last few months has been the rise of the USD - if you compare to currencies like the CAD or GBP or EUR (or most non USD pegged/linked currencies) the drop of the AUD has been nowhere near as dramatic - at least until
the last couple of days - in fact it has even risen against the JPY compared to 6-12 months ago.

 

[NM]

The bigger issue in my mind is not so much the A$ drop, but more so the oil price drop and yet the airline still impose huge fuel fines! Yes, the A$ drop affects fuel prices, but the oil price drop far exceeds the A$ drop.

 

[JohnK]

The bigger issue in my mind is not so much the A$ drop, but more so the oil price drop and yet the airline still impose huge fuel fines! Yes, the A$ drop affects fuel prices, but the oil price drop far exceeds the A$ drop.

You are trying to be too logical.

There goes your opportunity of ever working for Qantas.

 

[whatmeworry]

I guess at least there will be less Russians travelling around the world with the drop in the Rubble.

 

[zainman]

I guess at least there will be less Russians travelling around the world with the drop in the Rubble.

Probably fewer australians too..

 

[cove]

The Rubble is probably an appropriate misspelling of the Russian currency.
Our RBA want our currency at 0.75 to the USD.

 

[moa999]

Also wonder if it will halt the flood of Chinese money. Given the own to the USD anyone who has invested in the last few years has dusted a few $

 

[moa999]

Delete this

 

[Awesom Andy]

Also wonder if it will halt the flood of Chinese money.

They'll see the price drop and buy more.

 

[RAM]

We still manufacture in Australia. Now I can smile about that.
Every time we buy to cover our imports we feel like we are donkeys then a week later it was a guru type of decision. There is very little to support our currency at the moment. Interest rates did not help Mr Putin in Russia.
If our currency falls a lot more it will reposition our wage rates so they are no longer out of all proportion with the world.
At 0.81 it is still pretty high.

But the amount manufactured is shrinking rapidly. Did you see Boeing is ceasing producing parts for the B777 in Australia and Australia has no part in the replacement supply chain for the new variant?

 

[cove]

The unwinding of excessive pays in Australia in mining and oil is now underway now that the profit margins have evaporated and thousands are being laid off. The exchange adjustment from 1.10 to 0.81 is a big part of that unwinding so that will help quite a bit. Our residential real estate prices won't look quite so crazy if our exchange rate settles around 0.75 but they will still be uncomfortably high compared with the rest of the world.
Yes we have lost many manufacturing jobs that went off overseas in the last decade and those jobs are unlikely to return.

 

[JohnK]

I guess at least there will be less Russians travelling around the world with the drop in the Rubble.

Oh please don't tease like that.

 

[Isochronous]

The unwinding of excessive pays in Australia in mining and oil is now underway now that the profit margins have evaporated and thousands are being laid off. The exchange adjustment from 1.10 to 0.81 is a big part of that unwinding so that will help quite a bit. Our residential real estate prices won't look quite so crazy if our exchange rate settles around 0.75 but they will still be uncomfortably high compared with the rest of the world.
Yes we have lost many manufacturing jobs that went off overseas in the last decade and those jobs are unlikely to return.

But real estate prices will remain crazy as a ratio to Australian wages.