Australia Exchange Rate

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Australia: The Australian dollar depreciates in September

October 16, 2014

The Australian dollar (AUD) ended September at 0.88 USD per AUD, which was 6.4% weaker than the same day of the previous month. The AUD fell to a low of 0.87 USD per AUD on 29 September, which marked the weakest value of the dollar since January. On an annual basis, the AUD depreciated 6.0% over the last day of September 2013. Since September ended, the dollar has remained rather stable, hovering around 0.88 USD per AUD.

The depreciation comes amid a weakening outlook for the Australian economy and an increasing expectation that the Fed will raise interest rates in the near future. An increase in American interest rates would make other currencies less attractive to investors and has resulted in a wide selloff of assets worldwide. The Fed is set to end its bond-buying program this month and is expected to begin raising interest rates as early as Q2 2015.

The depreciation of the dollar is not necessarily bad news for Australia. The Reserve Bank of Australia (RBA) has repeatedly expressed concern that the exchange rate has been too high compared with its historical value and that this has resulted in it, “offering less assistance than would normally be expected in achieving balanced growth in the economy.”

FocusEconomics Consensus Forecast panelists expect the dollar to rebound and end 2014 at 0.91 USD per AUD, which is unchanged from last month’s forecast. In 2015, the panelists believe the dollar will depreciate to 0.87 USD per AUD, which is down 0.01 percentage points from the previous month’s forecast.


Author: Angela Bouzanis, Senior Economist

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Australia Exchange Rate Chart


Australia Exchange Rate October 2014 0

Note: Value of monthly consumer confidence.
Source: Thomson Reuters.


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