According to economists the Australian Dollar’s days of trading above parity against the US Dollar is a thing of the past as the two economies start down different roads, one for economic recovery and growth and the other softening toward possible recession.
For the rest of 2013 the ‘Aussie’ is expected to remain in the range between US86c and US96.5c.
The US economy is recovering strongly and is expected to get up to full speed within a year or two, a move that is opposite to the economies of Australia and China which are expected to both enter a period of softening.
Bad news for the Australian Dollar exchange rate
When there is good news for the USA there is bad news for Australian Dollar as it means that the US Federal Reserve will be more inclined to rein back its monetary easing policy. A policy that has helped emerging and commodity based currencies like the ‘Aussie’.
CMC Markets senior trader Tim Waterer said the prospect of another interest rate cut or two by the Reserve Bank of Australia is also putting downward pressure on the Australian dollar.
“There are certainly a number of headwinds against the Australian dollar on the domestic front, depending on how aggressive the RBA wants to be on its interest rate cutting,” he said.
“If Chinese economic numbers start to show further softness like we’ve seen recently then I would expect further downward pressure on commodity prices and that would hurt the commodity-block currencies.”
The weakening ‘Aussie’ is not all bad news however. Exporters will see the benefit of a weaker currency which in turn could stave off the threat of recession. Australian Treasurer Wayne Swan said that he wants the currency to weaken further.
“It’s good to see the Australian dollar depreciating, as it should as our terms of trade weaken and as the U.S. begins the very long journey back to normal monetary policy settings,” Swan said.
Current Australian Dollar (AUD) Exchange Rates
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The Australian Dollar/US Dollar Exchange Rate is currently in the region of: 0.9272 >
The Australian Dollar/Euro Exchange Rate is currently in the region of: 0.7060 >
The Australian Dollar/Pound Sterling Exchange Rate is currently in the region of: 0.6007 >
The Euro/Australian Dollar Exchange Rate is currently in the region of: 1.4162 <
The New Zealand Dollar/Australian Dollar Exchange Rate is currently in the region of: 0.8388 <
Correct as of 09:40 am GMT