13 February 2014

The Australian dollar – still more to fall

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Aust dollar

Introduction

Over the last year the $A has fallen from around $US1.05 to around $US0.89 – a fall of 15%. In fact the $A is down nearly 20% from its 2011 high. The drivers of the slump have been a combination of lower commodity prices; increasing evidence that Australia is not competitive internationally; a deterioration in Australia’s relative growth outlook; falling Australian interest rates; and more recently the Fed’s move to slow down its monetary stimulus. RBA “jawboning” has also helped. Despite periodic bounces, like that in the last few days, our assessment is that more downside lies ahead.

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The Australian dollar – still more to fall

The author is an employee of Verante Financial Planning in Castle Hill, Corporate Authorised Representative of Magnitude Group Limited, Licence No 221557, Magnitude Group Limited ABN 54 086 266 202.

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