The rise of the Australian Dollar (AUD)

The aussie dollar  reached parity against the US dollar in Nov 2010 and since then   analysts  have been predicting that it would only get better and possibly reach $1.10 against the USD.  Well the AUD as of today is on the brink of breaking past that  prediction , with it currently trading at $1.09 against the US dollar.

What the strong Australian dollar means to us Australians

Sectors to “Boom” with the Rise of the AUD :

Boom for Shoppers:
Import sectors  like electronics and cars manufacturing will get cheaper and make them cheaper in coming months if retailers pass on savings.
Buying goods online from places like the US and UK will also become cheaper for consumers.
Cheap holidays for Travelers’:
Overseas holidays will be less expensive, with more buying power for everything from hotels to shopping due to the aussie dollar getting more bang for your buck. Airlines pay for fuel in US dollars so fares should also get cheaper. This depends on whether airlines pass on savings to people or pocket it themselves.
aud rise usd  forex effects of AUD rise
The higher Australian dollar may make the Reserve Bank a little less willing to raise rates, but then this again will be looked at in relation to many other factors as well before the decision is made by the RBA.
Importers bargain :
It will be cheaper for businesses that import  their good from overseas as it will ge cheaper  for them to source their goods. It depends on whether  businesses will  pass on the savings onto consumers or increase margins.

Sectors to “LOSE” with the rise of the AUD :

Exporters To lose profits:
Farmers and winemakers in australia  will continue to struggle as their goods become more expensive for overseas buyers. In addition, australian companies that  are based and operate overseas and want to send their profits back home will also lose out.
Manufacturers can lose :
The impact will depend on who the manufacturer is dealing with or which country it exports /imports its goods with . or then also where it sells its products. If this includes competition with imports and/or sales overseas then life will become harder depending on the dollar value ( or currency ) of that country .
australian dollar against us dollar
Loss for Internal Tourism operators:
Fewer travelers will choose to come here as Australia becomes a relatively expensive destination  other countries will have to shell out more money to get to Australia  and shop in Australia. This will hurt all aspects of our tourism industry with a domino affect hitting tour operators, transport industry, hotels and  shops related to tourism.
Education more expensive to overseas students:
Our billion dollar income that  we get from overseas students will be dearly hit. Our higher education institutions will suffer as studying in Australia becomes more expensive relative to other Western countries like the US or UK whose currency is moving downwards and are quite competitive in this sector.


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Posted in: AUD

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