The Australian dollar has declined significantly over the past two weeks from around 103 US cents to 97 cents in recent days.
The decline is caused by a number of factors including the relative strength of the Australian economy (particularly our resources sector), local interest rates, and the strength of our major trading partners.
We have described the movement of the dollar as a "decline" although the impact has varied effects and some would see this as positive for Australia. Here are some of the effects -
1. Australian travellers will find it dearer to travel overseas - perhaps more will travel within Australia which could be good for tourist sites like QVM.
2. Overseas travellers will find it cheaper to come to Australia- which could be good for tourist sites like QVM.
3. Imported goods will be dearer.
4. Exported goods will be cheaper.
Like most economic shifts there are winners and losers. Tourism is likely to be a winner in this case. How far is the dollar likely to fall? Some are predicting as low as 60 cents although general consensus seems to place fair value at around 75-80 cents.
Warning - much of this article is based on economic speculation.