It seems not a month goes by without a significant currency development being reported around the world. China’s devaluation of the Renminbi was the major recent shock and it created a series of follow on currency impacts, including further depreciation of the Australian Dollar, against the currencies of most of the nation’s major trading partners, not just against the US Dollar.
At the end of August, compared with the end of July, the Australian Dollar had declined 6.9% against the US Dollar, by 7.8% against the Japanese Yen and by 4.7% against the Euro. The chart below shows the details.
To go straight to the dashboard and take a closer look at the data, click here.
What the recent depreciation of the Australian Dollar reflects, in part, is the relevance of domestic factors to currency movements. Anaemic GDP growth of just 0.2% in the June Quarter helped push the currency down, for instance.
Of course, external factors weigh heavily on currencies. As the currencies with the most global clout move, currencies like the Australian Dollar are impacted.
More recently, in early September, the Australian Dollar dipped below USD0.7000 before recovering to above USD0.7200 when the US Federal Reserve declined the opportunity to increase interest rates, despite widespread expectations.
Despite the momentary lift, the consensus view is that the Australian Dollar will plumb lower depths in coming months. The most recent movements suggest that may well be against all major currencies, not just the US Dollar.
In the context of the timber and wood products trade, it will be of interest to see if a depreciated Australian Dollar has any impact on the volume and price of imported sawn softwood from Europe.
