The Australian dollar (AUD) is expected to fall significantly in the future, especially by September 30th, 2017. According to Florou, Kosi, and Pope (2017, p. 27), this will be unfortunate because the AUD rate has been rising in recent months.
The Impact on Other Currencies
The fall in the Australian dollar (AUD) is expected to have an effect on the US dollar (USD) and other currencies around the world. Furthermore, a drop in the AUD will either increase or decrease travel expenses. It has the potential to transform a company's profit into a loss. Furthermore, a stronger currency softens the blow of a collapsing economy for many countries. Therefore, what next for the Australian dollar?Factors Influencing the Australian Dollar's Movement
This essay would outline keys reasons where the Australian dollar would move to for the next few weeks or months specifically by 30th September 2017. This would provide better ideas on how the AUD is placed than depending on daily commentary that contradicts itself. By 27th July 2017, the AUD was worth $ 80 (Marginson 2015, p.12). This had not been witnessed in the country and across the globe for the last two years. However, this value is predicted to decline to $ 76.04 in the next few weeks or months. This decrease in the Australian dollar would occur due to the following reasons;An Asset-Based Analysis
The Australian dollar (AUD) is an asset- Marginson (2015, p. 13) argues that like any other asset, AUD holds values that can be analyzed. These values are characterized by high forces holding the AUD in its current situation. Additionally, other minor forces pull the currency from different directions. These forces such as decrease in rate of exchange for American dollar leads to decrease in the rate of AUD. By 30th September, the value of AUD would decline due to more assets that involve in active global competition regarding exchange rates.Higher Interest Rates
The difference in higher interest rates between the Australian dollar and US dollar would significantly affect the AUD in few weeks or months (Marginson 2015, p. 13). The AUD would decline due to inability to materially maintain the official cash rate higher than the rate of US Fed funds. This would make the Australian deposits to be less attractive hence leading to the foreign investors turning to US dollar and other currencies. This would initiate significant drop in the dollar status since many organizations and individuals would go for higher interest rates. The higher interest rates result in an increase in business activities such as ticket fares and booking of hotels. Therefore, lowering the interest rates by 30th September results into a drop in the dollar from $ 80 to 76.04 US cents (Apergis 2014, p. 80). This would require more economic growth with higher interest rates for it to maintain its current situation.The Economy
The economy- Florou, Kosi and Pope (2017, p. 27) elaborate that the commercial information plays a significant role towards moving the Australian dollar to its future position. Despite being indirect, weak economic growth points to a major decline in the rate of AUD. Currently, the AUD enjoys better economic growth due to standardized exchange rates. But in few months, the economy is predicted to decline thereby leading to a drop in the Australian dollar by a bigger margin due to an increased rate of unemployment. In addition to the more anticipated decline in full-time jobs within the next few months, the AUD would decrease in Asian trade, European nations, and the northern American business. Another factor is the drop in the consumer price index that would see the currency experiencing major drop across the country. The consumer price index (CPI) determines an increase or reduction in the price of the food commodity. However, in the next few months, the pricing value of food production would decrease hence reduction in the rate of exchange rates. This would consequently lead to the decline in AUD and other currencies across the globe. Cameron (2017, p. 84) argues that most economist predicts that the AUD value would decrease from $ 80 to $ 76.04 due to the expected change in the economy of many nations especially the United States, Europe, and Australia. This includes a reduction in the exchange rates of the currencies. The decrease in AUD would reduce the opportunities for the travellers and increases the activities and operations for the business exporters across the globe. This would ensure that the exporters enjoy a reduction in the currency exchange rates that Is characterized by a lot of charges.Price of Commodities
The price of commodities-The AUD is a primary commodity money. According to Marginson (2015, p. 10), this means that the dollar increases with increase in the price of commodities such as oil, coal, and coal. Australia is a major resource-rich nation, so naturally, there is increase and decrease in the price of goods. This affects the overall response of the dollar. However, by 30th September, the price of commodities is anticipated to decline due to more products in the global market. This would make the monetary value to decrease thereby reducing exchange rate between the AUD and other currencies. This essay predicts that by 30th September 2017 and onwards, the Australian dollar would significantly drop from $ 80.01 by July 2017 to $ 76.04 due to low-interest rates, pricing commodities, and a decrease in the economic growth (Cameron 2017, p. 84).References
Apergis, N., 2014. Can gold prices forecast the Australian dollar movements?. International Review of Economics & Finance, 29, pp.75-82.
Cameron, A., 2017. Australian wine exports: Outlook to 2021-22. Agricultural Commodities, 7(1), p.84.
Florou, A., Kosi, U. and Pope, P.F., 2017. Are international accounting standards more credit relevant than domestic standards?. Accounting and Business Research, 47(1), pp.1-29.
Marginson, S., 2015. International education in Australia: The roller coaster. International Higher Education, (68), pp.11-13.
