Time to sell Australian Dollar?
http://business.smh.com.au/business/economy-in-rapid-decline-20090422-afeg .html
Economy in rapid decline
THE Australian economy will shrink faster than the global average this year, the International Monetary Fund said last night, foreshadowing another dire batch of revisions in next month's budget.
http://business.smh.com.au/business/longterm-unemployment-risk-forecast-20 090424-ahbx.html
The recession is raising the risk of long-term unemployment in the Australian economy as the global slowdown rolls on, a research institute says
http://online.wsj.com/article/BT-CO-20090422-708524.html
The International Monetary Fund has sharply downgraded its outlook for the Australian economy this year, and is forecasting only a slight recovery in 2010 based on an expected pick up in key export markets
Any other thoughts. Thanks
Best Answer
197 points
whiteshadow204 answered 6 months ago …
I'm not sure when this was asked, it says "one month ago". Hopefully you didn't sell then. AUD/USD has had a massive run-up since march. (from .64 to over .80)
I think the general consensus among speculators about Australia is that they are poised to have one of the better recoveries from this mess. That is part of the reason why when the US stock markets start to recover, the "risk aversion" starts to wane and you see a rise in the commodity countries Australia in particular at this time.
My personal opinion (June 1st, 2009) is we are in a pullback in a bear market. When the the stock market heads back to its March levels, the currencies will also reverse, so there could be money to be made on selling AUD when it retraces its huge current run-up.
In the very long term though? personally, the only currency I'm likely to sell is USD. Today may not be the perfect time to, but I can't imagine how they're going to pay off the trillions in bailouts without printing money.
Answers
731 points
thinker70 answered 7 months ago …
While you cite 3 sources for your premise they hardly tell the whole story. Since we are in a world wide recession it is hardly surprising that Australia;s economy is predicted to contract and unemployment to increase. The same is true for many other nations, not least the U.S. where the present problems started.
That being said, a good case can be made for the Australian dollar to rise as it is a commodity rich country and with its proximity to China who has trillions in dollars to buy commodities needed to expand their economy to provide jobs for the hordes coming in from the countryside, DEMAND may cause a rebound in commodity prices and therefore the A/$ may rise in relation to other currencies.
This would particularly be true if the temporary rise in the U.S. dollar begins to draw back due to the dilution of all the stimulus funds diluting the value of the world primary reserve currency.
