EXECUTIVE SUMMARY:
The topic which will be investigated in this issue study is how the value of the Australian Dollar (AUD) affects Australian businesses. This investigation will look at what influences the value of the AUD, the negative and positive impacts on the fluctuating AUD has on Australian businesses and the effect of the exchange rate has on the rate of unemployment.
INTRODUCTION:
The price of the Aussie Dollar can have both positive and negative effects on businesses with any change in the price of the dollar can have a great impact on businesses. It is extremely important for Australian businesses to monitor the price of the AUD, to minimize any loss a change in the AUD could cause and also to help capitalize …show more content…
A lower dollar will make it cheaper for foreigners buying Australian exports which will increase the demand for Australian exporters. This is good for businesses which deal with a lot of exporting, because they can sell their goods for cheaper which increases the demand for their goods or they can sell it at the same rice but with less cost which increases their profit.
The opposite can be said for imports, where a high valued dollar makes the importing more expensive while a less valued dollar makes it cheaper. The price of imports has broader impact on businesses than just the businesses which deal directly with importing products. This is because the more expensive importing is for the country, the more expensive other commodities such as petrol will be, which will increase costs in other areas such as transport.
The price of the AUD can also affect the amount of the tourists that choose to visit Australia (Jack Gordon, 2012). A low Australian dollar means that Australian citizens are more likely to travel and spend their money within Australia because it’s cheaper. International tourists are also more likely to travel to Australia when the AUD is cheaper because it is better value for money for them. This affects businesses because the more people who come to Australia the more potential customers they could …show more content…
A high dollar puts a lot of pressure on big companies in the manufacturing, tourism, retail and construction sectors. These companies have to adjust their business models to accommodate for these pressures and this leads to a cut of jobs. When the dollar was selling $US1.14 in 2011 almost 60,000 jobs were lost (Herald Sun, 2011) as these companies tried to maintain profits. This also affects other businesses because unemployed people have less money to spend on goods on services which further puts pressure on businesses as there is less demand. People who are unsure about whether they will lose their jobs will also be more conservative with their spending so even if they don’t lose their jobs they are still not spending as
The topic which will be investigated in this issue study is how the value of the Australian Dollar (AUD) affects Australian businesses. This investigation will look at what influences the value of the AUD, the negative and positive impacts on the fluctuating AUD has on Australian businesses and the effect of the exchange rate has on the rate of unemployment.
INTRODUCTION:
The price of the Aussie Dollar can have both positive and negative effects on businesses with any change in the price of the dollar can have a great impact on businesses. It is extremely important for Australian businesses to monitor the price of the AUD, to minimize any loss a change in the AUD could cause and also to help capitalize …show more content…
A lower dollar will make it cheaper for foreigners buying Australian exports which will increase the demand for Australian exporters. This is good for businesses which deal with a lot of exporting, because they can sell their goods for cheaper which increases the demand for their goods or they can sell it at the same rice but with less cost which increases their profit.
The opposite can be said for imports, where a high valued dollar makes the importing more expensive while a less valued dollar makes it cheaper. The price of imports has broader impact on businesses than just the businesses which deal directly with importing products. This is because the more expensive importing is for the country, the more expensive other commodities such as petrol will be, which will increase costs in other areas such as transport.
The price of the AUD can also affect the amount of the tourists that choose to visit Australia (Jack Gordon, 2012). A low Australian dollar means that Australian citizens are more likely to travel and spend their money within Australia because it’s cheaper. International tourists are also more likely to travel to Australia when the AUD is cheaper because it is better value for money for them. This affects businesses because the more people who come to Australia the more potential customers they could …show more content…
A high dollar puts a lot of pressure on big companies in the manufacturing, tourism, retail and construction sectors. These companies have to adjust their business models to accommodate for these pressures and this leads to a cut of jobs. When the dollar was selling $US1.14 in 2011 almost 60,000 jobs were lost (Herald Sun, 2011) as these companies tried to maintain profits. This also affects other businesses because unemployed people have less money to spend on goods on services which further puts pressure on businesses as there is less demand. People who are unsure about whether they will lose their jobs will also be more conservative with their spending so even if they don’t lose their jobs they are still not spending as