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.”