September 16, 2010

Why is the Australian Dollar being hammered so much?

By Planet Wealth

Of all western economies, the Australian economy is one of the strongest at the moment. In the last two share trading days, our shares only fell 1.6% each day, while the rest of the world has been in freefall. Our government is in surplus, yet still spending huge to keep the economy chugging away. The expected growth over the next year is 2.3%. Thanks to some foresighted regulation, our banks are on solid ground, with the four main ones holding a AA rating (of only 13 banks in the world that retain that rating). Our interest rates are still a healthy 6%, and the government has guaranteed deposits in banks.

And yet our currency has lost 40% of its value in the last month. That makes it worse than Iceland, which is on the verge of catastrophe, and only Zimbabwe has been worse off. Admittedly, the Australian dollar was a bit over-valued to start with, but it now is more undervalued than it was overvalued. So why is it being hit so hard?

Topics: Uncategorized | 1 Comment »

One Response to “Why is the Australian Dollar being hammered so much?”

  1. sr_engr Says:
    September 16th, 2010 at 3:10 pm

    Its market value is not its actual value, but its perceived value.

    Its being hammered because the world perceives its value to be lower than it was.

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