By: lasty49
28/07/2008
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The Aussie dollar isnt high.Its only high because you have seen it come from .45 cents. Have you seen it fall from $1.50 pre float days ?
Australia isnt in a recession,far from it.
We are experiencing the biggest mineral boom ever.
Jobs are short in WA. 86,000 people are needed to service the mines and their communities.
A high Aussie dollar maybe damaging to our exporters but its a benefit to our overseas private sector debt of $580 billion.Why?
Because the repayments are cheaper which reduces their costs. |
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By: contratrad
22/07/2008
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Hello Everyone,
The presently high Aussie Dollar is there because of the present High Interest Rates and from what I can see we are now in a Recession. Once this is Official the Aussie Dollar will Drop to perhaps its rightful Level.
The question is how deep will the Recession become before out 'Out of touch' RBA reduces Interest Rates.
This Presently high Aussie Dollar is very damaging to our Exporters.
A concerned and depressed,
contra |
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By: contratrad
22/07/2008
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Hello Everyone,
The presently high Aussie Dollar is there because of the present High Interest Rates and from what I can see we are now in a Recession. Once this is Official the Aussie Dollar will Drop to perhaps its rightful Level.
The question is how deep will the Recession become before out 'Out of touch' RBA reduces Interest Rates.
This Presently high Aussie Dollar is very damaging to our Exporters.
A concerned and depressed,
contra |
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By: sashaspiron@y7mail.com
17/07/2008
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| Then what are the implications or rather ramifications of Australia acting as "Broker" to exchange Us$ to CNY ? |
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By: lasty49
15/07/2008
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"This is a bit misleading from my point of view. Singapore's policy is to allow exchange rate to fluctuate within a certain band (say plus/minus -2%) to control inflation. They did not aim to strengthen the exchange rate."
So far this year they have let their currency strengthen 5.8% which is alot for a managed float.
"It is effective. However, the issue here, MAS (Monetary Authority of Singapore) needs to intervene by selling/buying currency to maintain the exchange rate band which cost a lot of money. Bigger your economy more money you need to maintain the exchange rate."
Actually most managed floats are to prevent the currency's strength not weakness.
The MAS has been known to intervene agressively and to curb speculation.This is one central bank you dont mess with !
"The use of exchange rate rather than interest rates to fight inflation keep people employed as pressure is off small business"
Not true. Few days ago, I was in Singapore. There are a lot of small business suffering due to high cost."
Of course in these global inflationary markets all businesses are suffering including China.
However my point is that if you increase interest rates the cost to business will be far greater than a strengthening exchange rate. |
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By: lasty49
15/07/2008
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Getting back to the foreign borrowings.
Australia's foreign debt is private and sourced mainly from US dollars.
To repay this debt Australianh companies need to convert AUD into USD.The higher our exchange rate goes the less Australian companies have to pay in interest or principal. |
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By: s_step000
19/06/2008
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"Actually Todd, Singapore are experiencing 7.5%pct inflation.rather than lifting their rates which currently stand at 3.5% they will combat inflation by strengthening the exchange rate."
This is a bit misleading from my point of view. Singapore's policy is to allow exchange rate to fluctuate within a certain band (say plus/minus -2%) to control inflation. They did not aim to strengthen the exchange rate.
"The use of exchange rate rather than interest rates to fight inflation keep people employed as pressure is off small business.
Pretty simple but effective."
It is effective. However, the issue here, MAS (Monetary Authority of Singapore) needs to intervene by selling/buying currency to maintain the exchange rate band which cost a lot of money. Bigger your economy more money you need to maintain the exchange rate.
"The use of exchange rate rather than interest rates to fight inflation keep people employed as pressure is off small business"
Not true. Few days ago, I was in Singapore. There are a lot of small business suffering due to high cost. |
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By: loko_rus
19/06/2008
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Hi Lasty, I'd just like to discuss about your theory. You are suggesting that a strong $A would reduce the forien borrowings..
If you look at the U.S, they are having a huge bugget deficit, and I believe that is at least one factor that gave the Bush government incentive to support a weak dollor. Countries like China and *** an hold massive U.S bonds, when the dollor loses value, the bonds that holding by *** an simutanously loses value as well. Say, if *** an owns $500 U.S bonds which worth 10 eggs or 1000yen, after dollor's price drop down, now $500 bonds that *** an are holding could only buy 5 eggs or 500yen..
I think this apply to A$ as well. if China hold 100A$ bonds.. as A$ getting more and more expensive, china gains. |
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By: lasty49
17/06/2008
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Actually Todd, Singapore are experiencing 7.5%pct inflation.rather than lifting their rates which currently stand at 3.5% they will combat inflation by strengthening the exchange rate.
The reason why I use Singapore as an example is that they are 2nd most competitive economy in the world and catching up fast to the U.S. who rate No.1
The use of exchange rate rather than interest rates to fight inflation keep people employed as pressure is off small business.
Pretty simple but effective. |
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By: toddfatso
13/06/2008
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| good points lasty. higher AU$, more oil for our buck, inflation would go down, interest rates to follow.. |
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By: lasty49
11/06/2008
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The AUD in my view undervalued and the RBA have also conceded the fact.
The AUD needs to be at least AUD 1.10 vs USD to fight off inflation coming from external factors, oil and food the biggest contributors to western countries inflation concerns.
Our exports are primarily commodities which are in great demand so no impact.Our tourism is shot to pieces not by exchange rates but by fuel costs of air travel PLUS the worldtraveller is staying at home.
Imported goods will be cheaper which will dampen inflation and possibly lead to lower interest rates.
Our foreign debt will be reduce by 15pct. is this why the U.S. prefers a strong currency? |
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By: reynard2008@y7mail.com
28/05/2008
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| the AUD is only up against the USD. It is down 34.6% against oil and 11.6% against gold in the last 7 months |
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By: pol_pak
22/05/2008
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Perhaps a good time to sort through which dual listed corporations are listed on ASX and offshore.
Is downside to buying whilst the AUD is rising however as with all cycles when AUD heads down is a gain, which then may be needed even more.
. |
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By: reynard2008@y7mail.com
21/05/2008
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and sucks in cheap imports adding to inflation which according to the RBA mantra means higher interest rates
also makes our exports more expensive and less competitive
but it's goo for the USD so that's all right - we're getting our priorities right |
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By: pol_pak
21/05/2008
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Looks fairly healthy, however AUD rising eats away offshore investments...
Re PATKEN FINANCIAL LOAN OFFER
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This at least should replace their advert ;-) |
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By: lasty49
22/04/2008
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It looks to me like some sensibility has come back into the market and fundamentals are now taking hold over some technical trading.
95 cents has attracted keen sellers but I think we will have another run at this with success.
The Volcano is starting to fire up... Parity party update..
Too early to put the champagne on ice. |
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By: lasty49
26/03/2008
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Dont you just love the FX technical analysts,they change their tune every minute.
Most never called the move up from 70 cents and were bearish back in early 2007. Then once it got to 90 cents they called for parity.Now they see a sell off to 85 cents and wouldnt you know it bounced.
Chartists in these markets are useless.There are too many outside influences affecting orderley movements which chartists rely on.
The washing machine factor comes into play here.
Until the cycle is finished we dont know what comes out the cleanest or what old trusty sock is missing.
They feel they have to justify their jobs by calling it one way or other rather than saying they are unsure because of mixed signals.
I suppose they believe they can all become weatherforecasters if failure persists but the weathermen these days are fairly accurate. Astrology perhaps ? |
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By: realharpo
8/03/2008
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| Hey Tony, don't tell me you have sold out to the ugly Americans. Yeah, those Wall Street devils still want you to believe the greenback is for real wealth! |
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By: realharpo
8/03/2008
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| Hey, you got it ALL RIGHT, Mate! Right on! No country can depreciate itself to prosperity! |
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By: realharpo
8/03/2008
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| Are you stupid or what? A$ too high and killing exports? Hell, our infrastructure can't even handle our current exports with clogged roads and ports! A$ too high and sucking in too much imports? Well this is the perfect time to import high tech systems to improve our productivity, Mate! Since we don't have sufficient high skill people, we need high tech and expensive systems to do the jobs, and only a high Aussie dollar can afford that!!!! |
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By: lasty49
7/03/2008
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Its not a question of where you would prefer it but what the market preceives.
A strong Aussie dollar alleviates inflation by reducing imported good prices.
Our primary exports arent suffering from the strong dollar.If there is demand for a commodity with it be beef, wheat,coal or oil then people will pay for it.
Australia's biggest problem is logistical with poor infrastructure.
Manufacturers cant compete even if our dollar was at 50 cents because of labor costs.
A higher dollar is infact good for our economy.
We have massive overseas borrowings therefore repayments are cheaper.
Oil imports are cheaper.if our dollar was at 50 cents we would be paying $2.00 /litre at the pump which would be passed on to the transport companies and cause inflated consumer goods. |
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By: anthony_sadgrove
7/03/2008
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| what are you on about - it should be under 80 - it's way too high at the moment - it's killing exports and sucking in imports and blowing out our debt |
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By: lasty49
7/03/2008
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Given the strong commodity prices, healthy exports to the north and the weak USD, the Aussie dollar should be above parity.
It has tried a few times to move higher and a test of 95 cents failed big time as i think there is a massive option barrier there being protected.
So who could it be protecting the rise of the great Aussie battler?
RBA,China or is it the same old sentiment entrenched into the traders minds,"up the stairs down the lift shaft."
Will we get our parity party?
Well im starting to have second thoughts because if all the positives arent doing us any favours, one bad negative could send this currency into a dive as many economists and technical advisors are leaning the same way, North Bound.
Beware of the Bear.Its coming up to hibernation season however with climate change being all the hype, anything can happen. |
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