Pros and Cons of an Appreciation in Australian Dollar
Pros and Cons of an appreciation in Australian dollar
In the recent days, Australian dollar has witnesses a significant appreciation and keeps strong. To put in a simple way, appreciation of Australian dollar, for our ordinary consumer, means we can buy more goods than before using the same amount of money. This is caused by an increase of purchase power of Australian dollar. As for choices of consumers, foreign goods are especially welcomed for the simple reason that they become relatively cheaper than local produced goods, which is due to the high exchange rate. In addition, for overseas student, they will cost more than before to afford the expensive tuition fee. The tuition fee in Australia is kept the same amount; however, because of the high exchange rate of other currency over AUD, overseas students have to spend more.
According to the historical statistics of Australian dollar over US dollar, the rate fluctuates below 1 during 1986 to June 2010. However the rate reached parity in Oct of 2010. Afterwards, the rate was beyond 1 and Australian dollar begins to keep strong. The reason why Australian dollar keeps strong and the effects of appreciation on consumers and investors should be analyzed by macroeconomics.
The reason of the appreciation in Australian dollar is that the strong domestic economy of Australia and the sluggish of the United States’ economy. For the first reason, after the 2008 financial crisis, the Australian local economy remains stable and global inflation leads to prices fluctuate which would affect the Australian dollar appreciation. AUD is the commodity money and the Australian dollar was influenced by the commodities, especially the mining industry. Therefore, the AUD will appreciate because of the increasing of the commodities’ price. Let’s elaborate the strength of the Australian economy more details. There is no doubt that the Australian economy in recent years maintained a good momentum of development, therefore, the exchange rate
In the recent days, Australian dollar has witnesses a significant appreciation and keeps strong. To put in a simple way, appreciation of Australian dollar, for our ordinary consumer, means we can buy more goods than before using the same amount of money. This is caused by an increase of purchase power of Australian dollar. As for choices of consumers, foreign goods are especially welcomed for the simple reason that they become relatively cheaper than local produced goods, which is due to the high exchange rate. In addition, for overseas student, they will cost more than before to afford the expensive tuition fee. The tuition fee in Australia is kept the same amount; however, because of the high exchange rate of other currency over AUD, overseas students have to spend more.
According to the historical statistics of Australian dollar over US dollar, the rate fluctuates below 1 during 1986 to June 2010. However the rate reached parity in Oct of 2010. Afterwards, the rate was beyond 1 and Australian dollar begins to keep strong. The reason why Australian dollar keeps strong and the effects of appreciation on consumers and investors should be analyzed by macroeconomics.
The reason of the appreciation in Australian dollar is that the strong domestic economy of Australia and the sluggish of the United States’ economy. For the first reason, after the 2008 financial crisis, the Australian local economy remains stable and global inflation leads to prices fluctuate which would affect the Australian dollar appreciation. AUD is the commodity money and the Australian dollar was influenced by the commodities, especially the mining industry. Therefore, the AUD will appreciate because of the increasing of the commodities’ price. Let’s elaborate the strength of the Australian economy more details. There is no doubt that the Australian economy in recent years maintained a good momentum of development, therefore, the exchange rate