World Gives Aussie Dollar a Walloping
October 27th, 2008Via: Sydney Morning Herald:
GLOBAL financial markets have singled out the Australian dollar for special punishment. Over the weekend the local currency was subjected to its biggest sell-off since it was floated in 1983.
As the gloom darkens over the global economy, the frenzied sell-off on world sharemarkets has spread to currency markets, and the Australian dollar reached a five-year low of 60.57 cents against the US dollar and a record low against the Japanese yen.
The big fall in the Australian dollar prompted London’s Financial Times to dub the currency the “whipping boy” of foreign exchange markets.
The dollar closed in US trade at US61.78 cents, down US4.5 cents on Friday night and 37 per cent from the high of US98.49 cents it reached three months ago.
The slump in the currency has confounded even the most seasoned of market commentators. The dollar has even been strongly outperformed by Iceland’s hapless krona and Brazil’s real over the weekend.
“It’s just strange. It’s just weird,” said the chief economist of BT Financial Group, Chris Caton. Dr Caton said about one-third of the fall in the dollar could be explained by the recent surge in the US dollar, which has risen against major currencies such as the euro and the British pound.
“There’s no rational reason for us to be at 62 cents,” he said.
The chief equities economist with CommSec, Craig James, said the recent fall in the dollar could be a blessing for the slowing domestic economy because it would provide a boost to exports.
“It’s something we shouldn’t fear here in Australia.”
Like the fall in the currency in 1997 that helped buffer Australia against the ravages of the Asian economic crisis, Mr James said, the weekend’s slump could offer protection against the current global financial turmoil.
Importers, especially retailers, face the challenge of paying more for goods that will be increasingly difficult to sell in a slowing economy.
However, it remains to be seen whether higher import prices could translate into higher costs for consumers.
I sold my CD is Aussie’s dollars on Friday morning. I’ve given up on currency trading altogether. I feel bad for the Aussie’s. The U.S. dollar will be heading its way.
“The slump in the currency has confounded even the most seasoned of market commentators.”
LOL!
“it remains to be seen whether higher import prices could translate into higher costs for consumers”
ROFL x 2 !
i am sure the people who write this crap do not do so with a straight face.
Really tochigi? Which commentators were you reading who predicted a big fall in the Aussie dollar?
Everybody I listen to was saying that, since it was backed by commodities, it should hold up pretty well…
helloooo?
could you show where i said anything like “l know commentators who were predicting a fall in the aussie dollar”?
in case a recap is necessary, i wrote:
just in case you misunderstood, i was ridiculing “the most seasoned of market commentators”, especially the image of such eminent thinkers appearing “confounded”.
hope that clears it up for you!
(btw, seasoned commentators seem to have overlooked the small matter of a gigantic carry trade, which just might unwind, one day. c’est la vie…)