The Aussie dollar bottomed out this weak around the 81 cent mark against the US dollar and forecasts are that it will head lower in 2015. Indeed RBA Governor Stevens recently said he thought 75 cents was now the appropriate level.
At 0.8169 this morning the Aussie is only 4-5 cents above the long-run post float average.
That’s great news for Australian businesses who have been buffetted over the past few years by a high Australian dollar. The prospect of further falls is good news for business and the economy more broadly.
AiG CEO Innes Willox has put out a Christmas press release cheering the fall in the Aussie.
“The Aussie dollar’s ride towards US 80 cents is a clear positive for domestic producers competing against imports or selling into export markets,” Willox said adding that “the dollar’s decline is a Christmas bonus for dollar-exposed industries such as manufacturing and tourism who are now enjoying the dollar at its lowest level since June 2010.”
But while the news is good economically and for business the fall does not give “instant gratification” Willox said. “Some producers, including many manufacturers, who adjusted their business models to protect themselves from the high dollar – such as by importing components. While this reduced their exposure to our high dollar, these domestic producers will have to wait for the benefits as they readjust to the lower currency.”
Either way the benefits will flow and the economy will benefit now and into 2015.
It might be a very merry Australian Business Christmas thanks to the currency’s fall.
Here’s the long-term chart of the Aussie dollar.