The Aussie dollar’s fall continues and it is now trading below 76 cents as the euro’s slow-motion crash and the surge in the US dollar continue.
In terms of the big falls for the euro and pound, the Aussie dollar’s current fall of just 0.55% to 0.7581 is fairly solid but the low overnight of 0.7558 is the lowest level since May 2009.
The move lower is going to be a salve for the Australian economy in need of a growth engine as RBA assistant governor Christopher Kent noted yesterday.
Kent highlighted that the 20 per cent TWI fall so far from the 2013 high had been “helpful” to the economy and the currency depreciation was “starting to play a role in helping the economy adjust”.
But Kent and his colleagues at the RBA still want the Aussie dollar to head lower. Even at current levels “our exchange rate remains relatively high given the state of our overall economy,” Kent said.
The outlook for the Aussie going forward is highly dependent on the US dollar’s continued rally and with that in mind, forecasts of euro into the 80s in 2017 imply an Aussie dollar that will be trading well in the 60s against the US dollar.
That will be very welcome news for the local economy.