The Impact Of Australian Dollar On Australia s...

Over the past five years the Australian dollar has significantly dropped in value, this holds significant impact for key areas in Australia’s international growth. Looking at charts from the past 5 years compared to the past 20 years, it was easy to see that the Australian dollar is currently sitting at an average rate, whereas from 2010 to 2013 the Australian dollar was at an unusual peak Pettinger, T. (2013). The International Monetary Fund’s latest forecasts show economic growth in Australia staying under 2.5% and below global trends in 2016 before a recovery over the next two years Gurrib, I. (2012). The significant factor in slower growth is the shrinking activity in China, Australia’s biggest export destination, which means fewer†¦show more content†¦(Economics, T. (2016)) Table 1 Currency Weights (%) Chinese renminbi 26.7150 Japanese Yen 11.8869 USD 10.8137 European Euro 9.2587 South Korean Won 6.0400 Singapore Dollar 5.0235 New Zealand Dollar 4.1418 United Kingdom Pound 3.7134 Thai Baht 3.5237 Malaysian Ringgit 3.3181 Value and impact of changes to the $A Australia’s dollar value changes every hour which can have a large impact or small impact on our economy and the world economy. The dollar Impacts businesses in Australia that play an important role in the exportation of goods and importation of raw materials Pettinger, T. (2013). If the Australian dollar was too depreciate it would make exports cheaper and imports into Australia more expensive. The impact of the depreciation of the Australian dollar matter upon the elasticity of demand, If firms sell goods that are price inelastic, then the fall in their foreign price will have a relatively small increase in demand. If exports are price sensitive, then there’s a bigger percentage increase in demand (Pettinger, T. 2013). A possible problem of a depreciation in the Australian dollar is that it may cause inflation. Firms could then face costs such as greater uncertainty in inflation does result. Both demand and inflation are major causes in the value and change of the Aus tralian dollar. Australia’s International Competitiveness: International Competitiveness