The Australian government is currently trying to deflate the value of the Australian dollar against other currencies. There are number of reasons as to why they are doing so. The decline in the Australian dollar value affects many companies positively and negatively. Once compared however there are many more winners who benefit from this decision than there are losers.
In order to target a lower exchange rate the RBA is easing monetary policy
The Australian dollar has appreciated strongly and actively against the US dollar over the past decade. It rose from less than $0.80 US in 2005 to a peak of over $1.10 US in 2011. In saying this there have been a number of throughs throughout the appreciation, the main one being in 2009 while the global …show more content…
By July 2008, when Australia was on the brink of the global financial crisis the Australian dollar again rose $0.96 US which showed that economic activity was booming, however by October/ November rates had dropped to $0.65 US. This was caused by a credit crunch, when a loss of confidence by US investors in the value of sub-prime mortgages caused a liquidity crisis. This then worsened as stock markets around the globe crashed, consumer confidence also declined as people were in fear of what could lie ahead. Australia’s government at the times main objective in response to the financial crisis was to fight inflation, which was a major problem in the economy at that time. As Australia was facing a recession an economic stimulus package was announced. It included payments to families, carers and seniors, the automotive industry was helped as several lenders had withdrawn from the industry completely. Australia was quick to recover however with exchange rates bouncing back up to a high of $0.91 US in January 2010. The highest peak on the graph in appendix 2 is shown to have occurred in 2011, this was due to a number of factors one being the Europe’s sovereign debt
In order to target a lower exchange rate the RBA is easing monetary policy
The Australian dollar has appreciated strongly and actively against the US dollar over the past decade. It rose from less than $0.80 US in 2005 to a peak of over $1.10 US in 2011. In saying this there have been a number of throughs throughout the appreciation, the main one being in 2009 while the global …show more content…
By July 2008, when Australia was on the brink of the global financial crisis the Australian dollar again rose $0.96 US which showed that economic activity was booming, however by October/ November rates had dropped to $0.65 US. This was caused by a credit crunch, when a loss of confidence by US investors in the value of sub-prime mortgages caused a liquidity crisis. This then worsened as stock markets around the globe crashed, consumer confidence also declined as people were in fear of what could lie ahead. Australia’s government at the times main objective in response to the financial crisis was to fight inflation, which was a major problem in the economy at that time. As Australia was facing a recession an economic stimulus package was announced. It included payments to families, carers and seniors, the automotive industry was helped as several lenders had withdrawn from the industry completely. Australia was quick to recover however with exchange rates bouncing back up to a high of $0.91 US in January 2010. The highest peak on the graph in appendix 2 is shown to have occurred in 2011, this was due to a number of factors one being the Europe’s sovereign debt