Exchange rate (1 Viewer)

[Blondie]

erg i dont get it.
in relation to external stability and the sub dotpoint "trends":

my textbook says the $A has been depreciating, but its def been appreciating (eg against the $US). so...whats been going on in actual fact!? :S :mad1:

 

[TastesGoodBut]

its been appreciating... ur text book will be out of date, the rapid appreciation has only been fairly recent

its been appreciating for a number of reasons.

interest rate differentials between here and the US mean we are attracting more funds going to investment than america, there fore demand for $A increases

america has been in a recession

America ended its policy of maintaining a high dollar (stupid bush govt thought it was best for the unemployment) but he only recently reaslised if he let the dollar work with market forces things would be better

umm... thats about it.. in relation to external stability, it has an impact because if our dollar is high, imports become cheaper and exports become more expensive for people to purchase therefore we become less competitive on global markets. we will tend to purchase more imports than we will sell exports which means that our CAD will increase as export income may not be able to finance import spending...

i hope that helps.

 

[Blondie]

argh, if dollar is high IMPORTS are cheaper. im always getting that mixed up, so then i cant make the next connection in my essays cos that is way wrong. thanks heaps

 

[TastesGoodBut]

no worries blondone

 

[kt san]

yeah
aust. is like 4.75% cash rate
while US is 1%
and if u were saving money
the choice is obvious