Quote:
Originally Posted by chodadog
The issues in the US are only part of why the Aussie dollar is slipping against the US. The Australian dollar is a commodity currency. Commodities go down - the Aussie dollar goes down. Gold's dropped something like 200 bucks per ounce and Oil's gone from nearly $150/barrel to about $90 last time I bothered to check.
Add to that the lowering of interest rates recently coupled with a rate drop due any day, which will makes Australia a less tempting market to invest in, which in turn will weaken the Australian currency. Which will probably help Australia because our exports are cheaper to buy and that's where Australia really makes its bank.
That's my understanding, at least.
|
Yeah for many years Japanese investors (as an example) have been borrowing cheap Yen 0.5% and investing in a basket of high yielding currencies, including the AUD and NZD. They've been making a pretty penny taking our interest rates. Now however as interest rates come down and things look dicey, they're all trying to repatriate their funds back to Japan. This trade (the carry trade) has been built up over probably the last 5 years so when everybody tries to exit it over such a short time frame the results can get pretty volatile!