Travellers will immediately feel the impact of the Australian dollar’s weakness after it fell to a nine-month low, but there may be broader implications.
An overseas trip, a drive down to the petrol station, or a purchase from your favourite international online store will probably set you back more than it did a month ago, after the value of the Aussie dollar tumbled to a nine-month low.
Some goods or services purchased from overseas stores may already be more expensive, Mousina says, because banks processing the transaction will be using the current exchange rate. “I don’t know how much more businesses could pass on higher prices because retail spending has not been very strong over the past few months,” she said. “The depreciation has to be a medium-term trend for it to have a significant direct flow-on effect to goods prices at shops in Australia.”CommSec senior economist Ryan Felsman says the weaker Aussie dollar has raised the cost of importing petrol, at the same time as global oil prices have also been moving higher.
But BetaShares chief economist David Bassanese says the drop in the Australian dollar is unlikely to rattle the Reserve Bank just yet. The Chinese economy’s faltering recovery is also weighing the Australian dollar, says Bassanese. “If China’s economy slows, then demand for iron ore and coal will slow, putting downward pressure on commodity prices. That in turn affects the Aussie dollar because it’s correlated with commodity prices.”
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