Aussie Dollar sinking fast !

by **lucky55** » May 27, 2010, 11:01 pm

Anybody know why the Oz Dollar is dropping almost daily ?
It was 29+baht less than a month ago....today 26.3 :cry:

I hope it's not heading towards the 21 mark ,where it was last year after the financial meltdown !
This is getting to be a worry !

by **homer** » May 28, 2010, 5:48 am

It defies logic Lucky. Canadian dollar is tanking too. Both countries are economically sound. Current situation in Thailand should have the Baht going in the toilet but instead, the exchange is making gains and the Baht is appreciating. :confused:

It's a headscratcher, that's for sure. :confused:

by **Bandung_Dero** » May 28, 2010, 6:12 am

It is not defying logic! Both the Australian and Canadian ecconomies are commodity based. Because of the problems in Europe (Greece) you will have seen the western stock markets drop more than 10%. That reflects directly on those currencies hence the 10% drop against the USD and THB which is loosely tied too it.

Get over it. It's a fact of life which we mere mortals have no control over BUT can hedge against!

by **udonuk1** » May 28, 2010, 9:16 am

Since the depths of the credit crunch the aus and kiwi dollar have appreciated massively, 40% against most currencies. This was because of an increased risk appetite for currencies with higher interest rates like Aud and nzd. A few weeks ago ,because of greece and the euro problems , this sentiment changed, investors are now scared and now looking for safe currencies such as Us dollar and japan yen. There are also other factors in play : the overall devaluation of all paper currency and the transfer of wealth from the west to asia. Aud and nzd do well only when the world economy is doing ok because they offer much higher yields. The thai Baht has strengthened against all currencies recently even through the recent political problems. In a few months the euro scare will be forgotten and the high yielding currencies will rise again.

by **homer** » May 31, 2010, 12:17 am

Bandung_Dero wrote:It is not defying logic! Both the Australian and Canadian ecconomies are commodity based. Because of the problems in Europe (Greece) you will have seen the western stock markets drop more than 10%. That reflects directly on those currencies hence the 10% drop against the USD and THB which is loosely tied too it.

Get over it. It's a fact of life which we mere mortals have no control over BUT can hedge against!

Actually the TSX (Canadian stock exchange) has risen more than 10% year over year. Given that 80% of our exports go to the U.S., the problems facing Europe have had little effect on us. We've lost about 4% against the US buck and 10% against the Thai baht. My point was that the political turmoil in Thailand, by logic, should have seen the baht depreciating, and point in fact seems to have had the opposite effect.

by **Bandung_Dero** » May 31, 2010, 5:34 am

homer wrote:My point was that the political turmoil in Thailand, by logic, should have seen the baht depreciating, and point in fact seems to have had the opposite effect.

BUT their GDP and economy are stable and that's 'basically' all the monitory markets are interested in.

by **nkstan** » May 31, 2010, 6:38 am

I wonder how much the proposed 40% tax on commodity profits has effected the currency situation,plus the meltdown of the EU that is underway?
It all might defy the perceived logic of the naive less informed individual investors,but you can bet your booty that the central banks,hedge funds and professionals have logical reasoning!

by **Miruku** » May 31, 2010, 1:25 pm

I think the Oz dollar is a cork floating on the roiling seas of international currencies. Last September I sold something based on an exchange rate of US$0.8400 but next day to my horror, before I could hedge it, the rate had shot up to US$0.8600 which meant a substantial loss if I hedged at this rate. I left it open and rode the rate up through US$9300 on the hope that as per usual the Oz dollar would sooner or later get caught up in a downward correction. To my great relief last Friday week the rate dropped to US$0.8257 at which point I fixed it, making my original profit plus a little extra for my pain and suffering. Today the rate is back up to close to US$0.8500 which I think proves my cork theory and I would not punt on the future direction of the Oz dollar.

by **wazza** » May 31, 2010, 5:45 pm

Its all knee jerking to the Euro crisis , major bank shares dropped like hell,

2nd biggest drop on the ASX ever , apart from the GFC in 2008.

by **KHONDAHM** » June 1, 2010, 5:13 pm

If I had to choose a "western" currency to be in, it would be AUD or SFC - in that order. Any weakness in the AUD is a buy IMHO. Australia has exportable resources and China is shopping. There is talk of China potentially expanding the reach of the Yuan to include settlement in Yuan for imports. If/when that happens, AUD goes verticle. All IMHO.

by **JimboPSM** » June 2, 2010, 1:44 am

Much (but by no means all) of the movement in recent days related to increasing speculation as to whether the RBoA would increase, decrease or leave the interest rate where it was.

That speculation ended today when the RBoA announced that the rate would remain unchanged.

The press release on the interest rate decision is (IMHO) worth a read, it is a far more measured and objective assessment than one tends to find in the financial media these days which, in my opinion, is increasingly reporting "speculation" rather than facts:

http://www.rba.gov.au/media-releases/2010/mr-10-11.html

by **Miruku** » June 2, 2010, 8:36 am

IMHO, currency speculation is just another form of gambling and most financial pundits, like accountants, are "mere recorders of history".

by **udonuk1** » June 2, 2010, 7:05 pm

KHONDAHM wrote:If I had to choose a "western" currency to be in, it would be AUD or SFC - in that order. Any weakness in the AUD is a buy IMHO. Australia has exportable resources and China is shopping. There is talk of China potentially expanding the reach of the Yuan to include settlement in Yuan for imports. If/when that happens, AUD goes verticle. All IMHO.

This is not a flippant question, but do you mean vertically in which direction ? And why ?

by **udonuk1** » June 2, 2010, 8:13 pm

nkstan wrote:I wonder how much the proposed 40% tax on commodity profits has effected the currency situation,plus the meltdown of the EU that is underway?
It all might defy the perceived logic of the naive less informed individual investors,but you can bet your booty that the central banks,hedge funds and professionals have logical reasoning!

Aussie Dollar sinking fast !

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