Paper
The Australian Dollar is a “Commodity Currency”. A “Commodity Currency” means that its fortunes are heavily dependent on the prices of Gold, Copper, Nickel, Coal and Wool. All of these commodities are Australia?s main exports.
At present, commodity prices are low, especially gold. Melbourne-based mining consultant Surbiton Associates said exports of Australian gold were in danger of declining if exploration failed to be supported and production declined as a result. The country produces about $5 billion worth of gold each year and over the past 10 years the metal has earned $42 billion in export revenue.
Presently, our dollar has been the weakest in history, comparable to the United States (US) dollar. The record low occurred in early April where it sank to 47.75 US cents. Compared to the US dollar, our Australian dollar buys at present 50.81 US cents. (27 July 2001).
It is unrealistic to determine what started the dollars slide or when it started. In this graph it is visible that the dollar started to drop as far back as April 1997. Although, we can never be sure that the fluctuations are actually fluctuations in the or those of the .
For that reason the following figure shows the movements in the against the trade weighted index (TWI). As its name indicates, the trade weighted index tries to measure the value of the against a basket of currencies. Those currencies are chosen to reflect the weight in Australia’s trade with the countries issuing the currencies in the index.
At the moment, the US dollar is very strong. This is surprising considering that the American economy is not very strong. Interest rates in the US basically show the situation. Americas interest rates have seen five cuts over the last four months to where it now sits at 3.75%. This was the US governments? way of trying to kick-start the economy through fiscal policy. This is why many economists believe the US dollar will subside, as there is no backing in the economy.
The ?Aussie?, as it is referred to in foreign markets, is believed to be dependent on the performance of the Japanese Yen and the new Eurodollar, with the three currencies tending to move in tandem. This is because of Australia?s importing and exporting relationship with the two other currencies.
Interest Rates At the moment the interest rate in Australia sits at 5%. In resent times interest rates have been subject to three cuts. One on February 7th that cut interest rates from 6.25% to 5.75% down half a percent, another on March 7th this time down a quarter of a percent and finally on April 4th were it was cut once more by half a percent down to 5%.
The interest rate cuts were caused by the dollars instability and also by, building approvals which were down around thirty per cent comparable to the previous period. This was the government?s intervention into kick starting the economy; to inturn get people spending, creating a demand for the Australian dollar by, building more homes. This process takes time to react, around twelve to eighteen months, therefore the interest rate cuts have not so far affected the dollar.
Positives to come out of a weak Aussie dollarEver since, other markets noticed the ?Aussie? plummeting they, especially the US, started purchasing more of Australia?s exports. This is one of the positives to come out from the Australian dollar?s low level. Also if the dollar is low it keeps the current account deficit low. This is the situation, as Australians will not buy imports when they are expensive therefore not growing Australia?s international debt or current account.
Negatives to come out of a weak Aussie dollarComparatively to the positives, the negatives are that imports are far more expensive. As Australia imports around eighty per cent of its product that it uses, the negatives of a weak dollar out way the positives of having a weak dollar for the average Australian. Although, as a nation it would be better for Australia to have a weak dollar if we could produce more of a variety for our own consumption. This is so, because if we had a weak dollar exports would be up, imports would be at a minimum and therefore the current account deficit would be kept low. Although, those necessities that we would need to import would be placed on the current account that would need to be paid back in the foreign currency which would most likely be greatly stronger than the Australian therefore limiting this situation.
Internal CausesInternal causes of the low dollar include the low commodity prices, the balance of payments gap and interest rates. The view is also being advanced that the decline in the dollar’s value is an expression of deeper processes, bound up with the changes associated with new technologies and the Internet. These concerns are summed up in the claim that Australia is being increasingly viewed by international markets as an ?old economy?. An old economy meaning that it is based on the export of raw materials and minerals, and does not have the new technology-based industries necessary to attract international capital.
External CausesAs our dollar is only being compared to the US, it may be just the case of the US dollar being so strong. In this case, as it partly is, the US dollar is far to overrated.
Were the dollar is goingDaniel Bases believes ?As increased prospects for global economic growth boost prices of raw commodities, currencies including such as the Australian, Canadian and New Zealand dollars and the South African rand that are economies highly dependent on the export of natural resources will begun to gradually rise.?
Similarly, I believe that the US dollar will subside and as the US dollar lowers the Australian dollar will go up comparatively. The Australian dollar will also rise over the next twelve months because of commodity prices increasing recently. Although overall I believe the dollar will sit comfortably at US 57 cents by the end of the year.
Другие работы по теме:
Christopher Skase
– The Sick Tycoon Essay, Research Paper In the early 1980’s a young confident man named Christopher Charles Skase became world famous by amassing a list of assets including a multi-million dollar company called Quintex, the
Rip Curl Essay Research Paper Rip curl
Rip Curl Essay, Research Paper Rip curl assignment! Two Australian surfers started rip Curl in 1969, at Bells Beach. They first designed surfboards, but then soon moved into wetsuits designs. They were wetsuit ‘designed by surfers for surfers’. At the time, there was a great demand for wetsuits. In 1970 they designed a new and improved wetsuit for diving, it had under arm gussets for better movement.
Castles Essay Research Paper Politicians have debated
Castles Essay, Research Paper Politicians have debated the focus of American foreign policy for decades. Of all the focal points of foreign policy, perhaps the most important should contain maintaining a strong United States dollar value. The value of the dollar determines the purchasing power of the dollar.
Walkabout Essay Research Paper WalkaboutWalkabout is about
Walkabout Essay, Research Paper Walkabout Walkabout is about a young girl, her younger brother, and a bush boy who fight for survival in the Australian desert. James Vance Marshall, the author, shows many problems of survival that the children are faced with, throughout their journey in the Australian desert.
Dollarization Essay Research Paper Richard W Stevenson
Dollarization Essay, Research Paper Richard W. Stevenson s article Greenspan View on Wider Use of Dollar discusses a process he refers to as dollarization. According to Mr. Stevenson, A number of countries have been considering abandoning their national currencies and adopting the American dollar the accepted international benchmark of stability as a way of reducing interest rates, inflation, and exchange rate volatility.
Film Marketing In Australia Essay Research Paper
It seems Australia’s film success is not determined by its quality but by its box office returns. The national identity of Australia has become nothing but a market strategy. The future of the
To Help The Poor Essay Research Paper
To Help the Poor The inequality of people has gained the attention of the media lately. Yet common people prefer using a dollar for something totally useless to
Bush Tax Proposal Essay Research Paper IPI
Bush Tax Proposal Essay, Research Paper IPI adresses the tax cut proposal that President Bush is presenting before Congress. IPI feels that althouh Al Gore had a good plan for the national tax cut by decreasing the national income tax, George Bush’s proposal was much better because it not only lowers income tax, but also eliminates estate and death tax (accounting for almost 66% of the 1,437.8 billion dollar cut).
Kangaroos Essay Research Paper KangaroosThe kangaroos are
Kangaroos Essay, Research Paper Kangaroos The kangaroos are not only best known in Australian Mammals they are the largest. The kangaroos include the red of the inland plains, the grays of the southern forests and woodlands. Wallaroos are shorter and heavily built. They also have fury hair. The closest related is the Antilopine kangaroo of the northern tropical grassland.
Canadian GDP Essay Research Paper The output
Canadian GDP Essay, Research Paper The output or GDP of Canada has increased from 1995 to 1999. This means that more people became employed or productivity has risen. With the GDP on the rise, Canada is able
Inflation Essay Research Paper InflationInflation is defined
Inflation Essay, Research Paper Inflation Inflation is defined as ?a period of rising prices when the purchasing power of the dollar is falling.? What this boils down to is that as time goes by the dollar bills worth decreases while at the same time prices rise. Now when I say the dollar bill?s value decreases I don?t mean a dollar reduces to ninety cents.
Australian People Essay Research Paper Australian PeopleThe
Australian People Essay, Research Paper Australian People The population of Australia is 18,438,824.The Birth Rate is 13.73, per 1000 people. The death rate is 6.89 per 1000 people. Those two were per year on average. The migration rate is 2.71 immigrants per 1000 people. The Life expectancy is higher than the US at 79.64. (Male 76.69, Female 82.74) There are three major ethnic groups in Australia.
The Importance Of Budgeting And Long Range
Financial Goals Essay, Research Paper The Importance of Budgeting and Long Range Financial Goals Me, being a financial independent have experienced first hand how important it is to keep a financial plan. Using a financial plan I have elevated my savings abilities a long way. Knowing where each dollar is being spent helps the spender to manage each dollar in an uplifting way.
CIntroduction Essay Research Paper
“I expect to pass through life but once. If therefore, there be any kindness I can show, or any good thing I can do any fellow-being, let me do it now, and not defer or neglect it, as I shall not pass this again.” — Penn
Euro In America Essay Research Paper On
Euro In America Essay, Research Paper On January 1,1999, the world witnessed a change never seen before: eleven nations of the European Union fixed their currencies to each other and established the world?s first common currency, the Euro. The creation of a single European currency will be the most important development in the international monetary system since the adoption of flexible exchange rates in the early 1970.
Cad Essay Research Paper Explain what is
Cad Essay, Research Paper Explain what is meant by a Current Account Deficit and why is it considered ‘bad’ to have an increasing CAD? The Current Account Deficit generally means that our nation is spending more than it earns. This means that we have to borrow from other countries in order to pay for the things we purchase (imports).
Pauline Hanson
– An Opinionative Essay Essay, Research Paper Beginning close to three years ago as a tiny, inconsiderable speck on the political horizon, Pauline Hanson has since seen her influence and attention in Australian politics skyrocket. So much so, in fact, that she is now arguably the most talked about politician in Australia, ahead of even the Prime Minister.
Judith Wright
’s Poetry Essay, Research Paper In what way is Judith Wright?s poetry a worthwhile study for Australian students?Judith Wright is a respected Australian poet is also known as a conservationist and protester. Her poetry has captured the most amazing imagery of Australian Culture. For Australian students to understand their own culture and history it is necessary to study the best poetry and Judith Wright?s poetry is definitely some of the best.
Economic Indicators Essay Research Paper Economics Assignment
Economic Indicators Essay, Research Paper Economics Assignment Section A Question 1 i) THE AUSTRALIAN DOLLAR – It is an economic indicator because the value of the Australian dollar determines how it is performing on a global basis. Most currencies around the world are floated; many financial organisations (eg RBA) have foreign exchange operations and trade (buy/sell) currencies.
The Typical Aussie Essay Research Paper I
The Typical Aussie Essay, Research Paper I am here to talk to you today about the typical australian, or if you prefer, the typical aussie. Australia is one of the greatest countries in the world, today. Not only for its
Joe Smith Essay Research Paper Joe Smith
Joe Smith Essay, Research Paper Joe Smith Returns To His Roots Seeing that Joe Smith received just two offers, he decided to return to his roots in Minnesota agreeing to the six-year 34 million dollar contract he rejected earlier this week. It appeared very evident that Smith was not re-signing with the Pistons after the press conference which was held this past Tuesday.
The Modified Market Economy Essay Research Paper
What is a modified market economy? What factors have been responsible for the emergence of this kind of economic system? How do governments influence economic decision making in such systems? Use Australian examples to illustrate your answer.
Traditional Ideologies Essay Research Paper Traditional Ideologies
Traditional Ideologies Essay, Research Paper Traditional Ideologies The texts that we, the reader, tend to relate to most are the texts that reflect our values or include certain social issues of the present. Texts such as these are therefore quite commonly found beside the beds, on the coffee tables and in the bookcases of many Australians.
Australian History Essay Research Paper With the
Australian History Essay, Research Paper With the merging of big players within and between such industries as insurance, business services, banking & finance, media and technology I propose to investigate the impact and feasability of a higher degree of vertical intergration in the form of mergers, acquisitions, convergence, complimentary shareholdings and alliances.
Dawn Fraser Essay Research Paper DAWN FRASERDawn
Dawn Fraser Essay, Research Paper DAWN FRASER Dawn Fraser grew up in the suburb of Balmain, a dockside industrial suburb in Sydney. She was the youngest of eight children, and suffered from anaemia, asthma and other chest complications. She learnt to swim at the age of five and two years later, Dawn Fraser swam for a professional body.
Australian Foreign Policy Essay Research Paper Australian
Australian Foreign Policy Essay, Research Paper Australian Foreign Policy Topic 2 Due Date: 26/5 Teacher: Br Smith Student: Luke O?Connor ?Australia was a good friend to the Indonesian independence movement in the years after World War 2, but Australia stood silently by as Dutch New Guinea was given to Indonesia.
Exchange Rates Essay Research Paper What is
Exchange Rates Essay, Research Paper What is an exchange rate? What factors determine the exchange rate for the Australian dollar? An exchange rate is the ratio at which a country’s currency exchanges for the currency of another country. Exchange rates are typically expressed as the foreign currency equivalent of one unit of domestic currency.
Reflection As Revision Essay Research Paper Reflection
Reflection As Revision Essay, Research Paper Reflection as RevisionAll through life I have always been told by people that it’s quality not quantity that matters. I cannot even remember the first time I heard it. If I only had a dollar for every time I was told that. If ever asked for the ultimate clichi, I would have to say quality not quantity.
Commercial Airlines Essay Research Paper Commercial Airplanes
Commercial Airlines Essay, Research Paper Commercial Airplanes: privately owned airplanes in the business of providing service to the general public. Talk about uses. Multibillion dollar industry in less than 90 years. Dates back to 1910. On June 22, 1910 the first regular passenger-carrying airship service was inaugurated.
Australian Report Essay Research Paper Essay Australian
Australian Report Essay, Research Paper Essay Australian Realm Why despite Australia?s visible advantages in natural resources, accessible ports and a huge educated population is Australia?s GNP growing at such a stunted
Case Study Essay Research Paper Case Study
Case Study Essay, Research Paper Case Study : Media ups and downs Summary: The Australian made midday television program ?Day time with Amanda? first aired in 1993, showing good ratings and high advertising revenue during its early stages.