dotty

Email from me accountant says Reserve Bank has decided to leave rates at 4.75% again this month. Hopefully this should help the $A dollar strengthen again. (Well I can hope)

Well better do some work now.

Florida_03

That is good news for those wanting to sell out of the $A. They seem convinced that if it breaks through US 68c then US 70c will be reached soon. US 70c is my trigger for conversion at the moment.

The Tooth Fairy

Typical response of the economy to a stronger $ is increased imports, decreased exports = higher trade deficit, higher interest rates to dampen demand = higher $.

May not be so typical this time it is not the $A that is appreciating so much as the $US depreciating and Aus interest rates are unlikely to increase against general decrease elsewhere.

Rosy

Have to disagree with you there...

The Aus $ IS appreciating - economy doing well, etc. etc. If you look at the rate of appreciation over other major world currencies you will find that the Aus $ IS doing very well thank you.

Also, UK economy is on the down (big time) and the Aus $ will continue to appreciate against the £ in these circumstances...

dotty

Just watching the news, Aus dollar buying 40.7 p I nearly choked on me wine.

porkchop

It's not all good new having a strong AU$.
Overseas companies will cut back on investment in Australia, exports will suffer, which will both increase unemployment.
Dont hold your breath, as in the near future we will see an interest rate cut, no doubt.
An interest rate cut will affect the exchange rate, as we know.

This could however be good news for those that have just started out with the immigration process. They are looking for the AU$ to weaken longer term.

PC

The Tooth Fairy

Not sure what you disagree with, $A appreciating? Yes it has gone up a bit against most but the $US has gone down more.

A strong Aus economy / $A sucks in imports. A weak global ecomony pushes down commodity prices and Aus exports: a balance of payments / trade crisis.

If demand for imports is not dampened by a weakening economy or by weakening the economy with higher interest rates, eventually the Aus credit rating drops: foreigners sell $A and down goes the $A sometimes dramatically.

porkchop

Just read a report by the reserve bank and it states.
The probable reason for no change in the interest rate was down to 2 points.
They are waiting for a downturn in property prices, and they also want inflation to go down, but they dont want to cut the rate as this will keep property prices rising.
They also said that once property prices and inflation reduces then the cut will have to be deaper than 1st thought.
The strong AU$ is having a terrible effect on exports. The worst for 20 Years.

PC

Kiwipaul

Agree with everything you say, this country has 3 big earners, Tourism, Agriculture and mining and all 3 are being hit hard by the high exchange rate.

I also believe outside currency speculators are ramping the A$ up against the US$ and when they think they have pushed it as high as it will go they will bail out and the $A will have a sudden fall against the US$, which should also see a fall against the pound as well.