How bushfires and Wuhan virus fear have converged to drag down Australia's currency

Brendan McDermid/Reuters

Australia’s national currency tumbled to its lowest level in over a month Friday, with the country’s economy vulnerable to the fallout of both bushfires raging within the country, and the coronavirus outbreak in China. The Australian dollar hit a low of 0.6818 per $US1, before paring only slightly Friday while dozens of bushfires continue to rage within Australia, with this year’s wildfire season creating the most damage the country has ever seen. Wall Street is scrambling to guage what impact that devastation could have on the Australian economy. Goldman Sachs estimates that the bushfires could level a -0.4% hit to GDP in the “near-term,” analyst Matthew Ross wrote in a January 23 research note. On top of that, markets are also concerned about the impact the coronavirus could have on China’s growth – in research notes, analysts at Morgan Stanley and Bank of America said they saw risk-off sentiment define Asian markets Friday. China is Australia’s top trading partner, according to a 2019 government report, leaving the country exposed to dips in activity that result from the Wuhan virus.

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