Some analysts believe the dollar may go below US60c, bringing joy to exporters and tourists, but encouraging further interest rate rises
A weaker yen has also delivered Japan higher levels of inflation after decades of deflationary risk. It’s an outcome that might now appeal to China too.
More recently, the US dollar and commodities such as oil have traded in the same direction. Attrill attributes the shift in part to supply mayhem, particularly in the wake of Russia’s invasion of Ukraine, which have masked the actual supply-demand balance.Nobody knows where the Australian dollar will end up in 2023, but the trajectory of Shanghai’s top 300 companies share index might be one proxy to watch, Attrill says.
He says importers will be suffering “a world of pain” if they are bringing in, say, ceramic tiles from Italy, but less so if they are importing from China, where the currency has been moving in tandem with Australia’s.Whether they pass on the cost to consumers will depend on their pricing power, Attrill says.
A tumbling dollar would act as an automatic stabiliser for the economy by supporting growth through more exports and reduced imports.
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