The Australian dollar has fallen sharply, falling at one point to a multi-year low of 61.88 US cents — a level not seen since October, 2022. A weak Australian dollar, which was changing hands at US62.20¢ on Thursday, makes imported products such as oil more expensive, adding to domestic inflation.
Whilst a weak Aussie can be seen as welcome news for Australian exporters as their goods and services become more price competitive, and for international tourists visiting Australia, for Australian tourists heading overseas, it can pose a problem to the hip pocket nerve and importantly, a falling Australian dollar can also put upwards pressure on inflation meaning the RBA won’t cut interest rates.
So today we look at why this is happening, and importantly what it means for Australian Interest rates, and the news is not good for those highly leveraged households under financial pressure.
The Australian dollar has also fallen to 0.4940 British pence, despite the UK economy also being in a slow growth mode. But the bottom line is a weak Aussie does not provide conditions for an early rate cut.
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