australian dollar falling rapidly (1 Viewer)

[aussie-boy]

our central bank rates are some of the highest in the world, and will still be even if they are reduced today (eg USA 2%, Aus 7%) - so there is still some incentive to invest in australia

but our dollar compared to the us dollar has spiralled downwards - why?

same with the euro...

and if it is related to the sharemarket, overseas markets have also fallen to new lows... shouldnt the currencies have remained approx the same

 

[scora]

Australia's cash rate is well placed, it is currently on the decline following the many successive increases. The only reason why the US's rate is so low is because they are trying to stimulate their economy in the midst of a recession.

It seems our dollar has taken a sharp hit because investors in Australia are concerned with the prospects of an American recession- this is reflected by our relative lack of confidence- who knows what's going to happen in the next few days.
The only market that doesn't seem to be affected is the asian market, and that's probably because their investors are unconcerned with the advent (of the US recession), in that they won't be affected.

 

[aussie-boy]

It seems our dollar has taken a sharp hit because investors in Australia are concerned with the prospects of an American recession- this is reflected by our relative lack of confidence- who knows what's going to happen in the next few days.
The only market that doesn't seem to be affected is the asian market, and that's probably because their investors are unconcerned with the advent (of the US recession), in that they won't be affected.

that makes no sense whatsoever

if investors are concerned with us recession, they would sell US currency (adding to supply = downward pressure on its exchange rate) and buy into our slightly more secure economy (ie more demand for AUD, upward pressure on currency)

but this is clearly not happening

 

[munchiecrunchie]

its got to do with speculators - they sell off the dollar when a rate cut is expected to benefit from the rate cut.

 

[lionking1191]

its got to do with speculators - they sell off the dollar when a rate cut is expected to benefit from the rate cut.

speculation over interest rate decrease means there will be LESS return (note change, not actual amount which is high compared to US) on investment in australia, hence reduced demand for $A and lower currency.

but wow, 100 basis points.

 

[danz90]

yeah... surprisingly a big cut by the RBA. this is reall good stuff for our essays.... MUCH more to talk about (in terms of monetary policy stance).

but this rate cut is no good for our exchange rates.. definitely going to depreciate.

 

[midifile]

Im so fucking pissed.

Im going to america in november.

WHY THE FUCK DID I NOT BUY US DOLLARS WHEN THE EXCHANGE WATE WAS 98c

 

[midifile]

That said, the dollar has improved a bit since just after 2:30 this afternoon.

was US$0.71 then, now US$0.73

 

[advanced sam]

Interest Rates Dropped By 1%

 

[runnable]

Im so fucking pissed.

Im going to america in november.

WHY THE FUCK DID I NOT BUY US DOLLARS WHEN THE EXCHANGE WATE WAS 98c

I feel the same way. Going to America too.

 

[seano77]

Also a note to consider is that some of the asian demand for commodities is starting to slow, and US export markets are also in turmoil because of the crisis. Imports are remaining fairly strong (especially from recent stimulation) whilst global insecurities cause a lull in demand for exports and investment and hence australian dollars.

 

[sirfeathers]

Remember also that the $A is a very popular currency for speculators(6th most traded in world) because we are a commodities-based economy, and demand for commodity exports are so strongly correlated with global growth levels. When global growth prospects are downgraded, as is occuring now in major trading partners such as China, all these speculators figure that the demand for Australian exports will drop and hence drop the value of the currency. So then they all dump their $As back in the forex market, up supply, down exchange rate etc etc. Basically a product of our comparatice advantage and our narrow export base.

 

[Mothers]

Hey guys, why is it that our dollar is falling quicker than the American dollar? Shouldn't it be more or less in line?

 

[stazi]

holy fuck :s $64cents!!!!!!

It's really plumetting. and it seems to be the aussie dollar falling overall. look at it against the singapore dollar over the past 2 years.

 

[aussie-boy]

Hey guys, why is it that our dollar is falling quicker than the American dollar? Shouldn't it be more or less in line?

+1

who would want to buy american currency at this time

and im really pissed off now, since the aud has fallen 20% against the euro... from E60 to E48... meaning my europtrip budgeted at $4000 will now cost $4896. FUCK!!!!!!!

 

[2162]

Mostly people who are frm Japan or borrowing money from Japan (low interest rate of 0.5% heck most Japanese dont even get any interest ( hide money under the mattress) )are pulling out their money out of Australia as they usually have their money in bonds and since commodities are going down, the rba is having a more loose monetary policy stance and the speculators see the interest rate level coming down again by 50 basis points next month thus bringing down their yield on the bonds. Most of them just want to get their profits asap and most of them are overreacting so it's a great time to buy AUD if you're a foreigner, we should see it correct itself in the coming days if nothing else pops up (probably unlikely). But then again, technological prices will readjust to our weak dollar and everything technological will be expensive

it is untrue that the Asian economies are not feeling the heat, most asian countries have had their stock exchanges fall in their fifth consecutive day, the nikkei lost 9% today so I think it is frivolous to say that the asians are not affected by this financial turmoil

I dont think it's so good that so much money is flowing from governments to the economy (700 bil stimulus package in the US, 4bil bailout and lowering interest rates, 50b pound rescue in UK) there's gonna be increased credit everywhere and it wont be good in the short term for inflation, then again it's true that we must bail-out these guys else we would fall anyway

 

[aussie-boy]

Mostly people who are frm Japan or borrowing money from Japan (low interest rate of 0.5% heck most Japanese dont even get any interest ( hide money under the mattress) )are pulling out their money out of Australia as they usually have their money in bonds and since commodities are going down, the rba is having a more loose monetary policy stance and the speculators see the interest rate level coming down again by 50 basis points next month thus bringing down their yield on the bonds. Most of them just want to get their profits asap and most of them are overreacting so it's a great time to buy AUD if you're a foreigner, we should see it correct itself in the coming days if nothing else pops up (probably unlikely). But then again, technological prices will readjust to our weak dollar and everything technological will be expensive

it is untrue that the Asian economies are not feeling the heat, most asian countries have had their stock exchanges fall in their fifth consecutive day, the nikkei lost 9% today so I think it is frivolous to say that the asians are not affected by this financial turmoil

I dont think it's so good that so much money is flowing from governments to the economy (700 bil stimulus package in the US, 4bil bailout and lowering interest rates, 50b pound rescue in UK) there's gonna be increased credit everywhere and it wont be good in the short term for inflation, then again it's true that we must bail-out these guys else we would fall anyway

but where can they invest there money at the moment that will give them a better return than they are getting in Australia? this is the issue of contention - yes rewards will be lower, but surely it is all relative in the global context

 

[Advv]

but where can they invest there money at the moment that will give them a better return than they are getting in Australia? this is the issue of contention - yes rewards will be lower, but surely it is all relative in the global context

New Zealand. They have the highest interest rates if I remember correctly though their monetary stance is also beginning to loosen.

 

[stazi]

almost uniform global interest rate cut. aussie dollar is on the rise again against the USD, SGD, GBP

 

[2162]

but where can they invest there money at the moment that will give them a better return than they are getting in Australia? this is the issue of contention - yes rewards will be lower, but surely it is all relative in the global context

The fact is that in spite of all this global fury is that they do not want to invest in risky australian dollars. The australian dollar contains many risks especially since it is a currency linked with commodity prices. The investors will not return really soon as the outlook on commodities is glum that is why they will not stay in Australia.

Right now investors are not looking to make money, rather salvage the potential losses they may get.

They will not invest in New Zealand because it has small potential for economic growth, just look at all the sheep and unflat land.