The Falling Australian Dollar

Nic Crowther
Tue 25 Nov

Listen carefully and you can hear the sound of the Australian dollar tumbling to new lows. This afternoon (Tuesday) it hit a new four-year low of US$0.854… many experts on the ‘South Pacific Peso’ believe there is still further to fall.

While this might have a negative effect on the amount of ASOS packages being delivered to your front door, it’s certainly getting the attention of Canberrans who are looking to send products offshore. Be it technology, services or manufacturing exports, every extra cent the dollar drops represents an increased advantage against international competitors and helps to strengthen profitability for Australian companies.

However, the other big player in town with an eye on the performance of the dollar is the Federal Government. It’s not a great time to deliver a promised surplus, either. They’re also experiencing the reality of decreasing revenues as Iron ore and coal reach prices not seen since shortly after the Global Financial Crisis, that aren’t even close to being covered by the increased spread between the US and Australian currencies.

Iron ore is now below $70 per tonne having seen prices as high as $185.00 during the height of the mining boom. Coal isn’t faring much better, down 40% since highs to $53.03. It’s a situation that is rumbling through the economy as investment continues to drop, mining industry wages are constrained, and shareholders feel the pinch.

The only hope for the balance of trade is that export industries that suffered the high dollar over the last five years can fill some of the void left by the mining sector. They won’t cover it all by any means, but the opportunities arte increasingly there for Canberra companies looking to expand their markets.