Decline Of The Australian Dollar Against The Us Dollar

The demand for Australia's currency in the foreign exchange market (Forex) is a derived demand. It is derived from the demand for a country's exports of goods and services and its assets.

The figure obviously had not return to pre-crisis level. Moreover, recent commodity prices had fallen significantly which will affect Australia’s short and long term economy.

For more than sixty years the United States dollar has been the central reserve currency for the world. A reserve currency, also referred to as an anchor currency, is a currency that is held in significant quantities by governments and institutions as part of their foreign exchange reserves (Carbaugh, 2011). As the world’s reserve currency, the U.S. dollar is used throughout the world as a medium of exchange and is used as the global currency for products traded within the global market. In recent years the status of the U.S. dollar has been contested by a select few around the world. Leaders are unconvinced about the future of the United States economy as their deficits are exceeding record highs. The following analysis will discuss

Achieving external stability is an important objective of economic policy, achieving this stability ensures that imbalances in Australia’s economic relationships with other economies do not hinder achieving domestic economic policy goals such as lower rate of unemployment, higher rate of growth and lower inflation. There are three main factors that effect external stability the deficit on the current account (CAD), net foreign liabilities and the Australian dollar. Australia’s experienced times when overseas investors decided that the economy’s external position was unstable, and when investors like such decide to withdraw their

The spread of globalisation especially since 1990 has introduced many new elements into the financial markets and what determines the value of a nation 's exchange rate. This does not just apply to Australia, but as we saw in the later half of the 1990 's, to many other nations in the world. Firstly, trade in goods and services makes up a much smaller proportion of the demand and supply for currency. In the world economy, payments for international trade only account for about 1% of foreign exchange transactions. The total foreign exchange requirements for exporting and importing of goods and services in Australia is less than 3% of the total use of the foreign exchange turnover in Australian dollars (Reserve Bank Bulletin, Table F7 and Australian National Accounts, 5206.0). The main purpose for foreign exchange trading is international financial transfers of

It is said that we are living in turbulent times. The Australia’s once-in-a-century commodity boom has reversed, leading many miners to cut back on investments and consolidate; which is expected to generate great social and economic hardship throughout these years. While more hope is casted into the construction sector, a cooling change blows in the housing market. Unemployment is tipped to rise and when it reaches a record high; consumption will continue to grow at a below-average pace, so business sentiment will remain fragile. Rather than fuelling the economy, the fiscal policy keeps straining it whilst the monetary policy will struggle to have an impact – indicating that the Australian economy is slipping downwards.

The Exchange rate is the amount one country will buy another country’s currency. The conversion of currency is not 1 dollar for 1 dollar. The exchange rate between Australia and America is $0.7676 for 1 Australian dollar. Exchange rates can change from day to day. Back in 2011 the exchange rate between Australia and the USA was 1 Australian dollar would buy 1.015 US dollars. It was almost 1 for 1.

Australia imports generously a larger number of merchandise and administrations from the USA than it fares to it. As shown in source B1, exports to the US are 15,533 million AUD, compared to the 39,181 million AUD that is imported from America. Australia’s exchange deficiency with the USA has enhanced marginally since 1998, from a top of $14.2b in that year, to $12.5b in 2003. It was at its most minimal in 2011 at $10.7b, when the $A conversion standard was least against the $US. Somewhere around 2010 and 2012 Australia 's fares to the USA were worth over $16.2b every year, except they tumbled to $14.2b in 2013. The USA got 10% of Australia 's aggregate fares in 2013, down from 12% in 2010. The USA 's relative significance to Australia as a wellspring of imports has declined relentlessly in the course of recent years (down from 22% of aggregate imports in 1998

Monetary Denomination I now am going to talk about Monetary Denomination and what Australia’s is and their current exchange rate. Australia’s national currency is the Australian dollar which comes in $5, $10, $20, $50, and $100 and the coins come in 5, 10, 20, and 50 cents. 1 US dollar is equal to about $1.29658 in Australia (Kara). The most popular exchange rate is AUD to GBP which is British currency. Australia’s currency symbol, in dollars is like ours it is the “$” sign and their cents symbol is simply a “c” sign.

The Board’s decision is based on the following conditions. According to the January 2016 World Economic Outlook (WEO) , the growth rate is 3.1% in 2015, which is less than the forecast in 2016 (3.4%) and 2017(3.6%). It is apparent that the global economy is slightly dipped and the economic recovery is predicted to be moderated in 2016. Besides, the surplus supply in the oil market possibly be moderated and the members noticed the World Bank adjusted the predicted oil price in 2016 from $37 per barrel to $41 per barrel , which may drive a growth of the inflation rate. The World Bank also pointed out that in February, the reduction forecast in metals prices is 8.2%, less than the prediction in January (10.2%)5. It is inimical to Australia, which is rich in mineral resources.

Exchange Rate is the rate at which one currency may be converted into another. The exchange rate is used when simply converting one currency to another (such as for the purposes of travel to another country), or for engaging in speculation or trading in the foreign exchange market. There are a wide variety of factors which influence the exchange rate, such as interest rates, inflation, and the state of politics and the economy in each country.

Value of Commodity and the Terms of Trade - The prices you get for your exports differing with the cost you pay for imports. Variances in item price and the terms of trade are central point that have affected the value of the Australian dollar over its past. Australia to a great extend is exporting nation and traditionally has generally disappearing exchange and in such manner waning trade rates over the decades. The currency will only rise if the prices improve.

In other words, the rate at which one currency can be exchanged for another” (Investopedia, 2012). Exchange rates play a fundamental role in Australia’s level of trade. Exchange rates are among the most watched, analysed and governmentally manipulated economic measures, but exchange rates matter on a smaller scale as well because an example being they impact the real return of an investor's portfolio (Investopedia, 2012). Exchange rates and interest rates, as well as inflation, are all interconnected. “Higher interest rates offer lenders, such as Australia’s four big banks; ANZ, NAB, Commonwealth and Westpac, a higher return compared to other countries...however lower interest rates tend to decrease exchange rates” (Investopedia, 2012). Australia’s exchange rates are published daily except on public and bank holidays by the Reserve Bank of Australia (RBA). The table below shows the exchange rates for the 13th, 14th and 17th of September 2012 (RBA website).

i) The exchange rate is the rate at which one can exchange the currency of one country for the currency of another country. It can also be regarded as the value of one country’s currency in relation to another currency. Basically, it is the price of a nation’s currency in terms of another currency. Therefore, the exchange rate has two components, the domestic currency and foreign currency, and it can be quoted directly or directly. In a direct quotation, the foreign currency is the base currency and the domestic currency is the counter currency. While in an indirect quotation, the domestic currency is the base currency and the domestic currency is the counter

The Philippine exchanged rate is express in terms of one unit of dollar versus one unit of peso. There are two cases on how an exchanged rate would be determined the first system is the free floating exchange rate where the supply and demand