ABC News Daily What Trump and China did to the Aussie dollar
Jan 15, 2025
Ian Verrender, ABC's chief business correspondent, shares his expertise on the economic implications of the Australian dollar's decline. He highlights how Trump's tariffs and policies have strengthened the US dollar, impacting Australia's currency. Ian argues that, despite challenges, interest rate cuts should remain an option for the Reserve Bank. He explores the interplay between the Aussie dollar and China's economic slowdown, as well as the speculative nature of currency fluctuations, making a compelling case for understanding these global dynamics.
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AUD vs. USD
- The Australian dollar's fall against the USD is primarily due to the USD's strength, not AUD weakness.
- This USD strength stems from Trump's tariff policies and economic policies impacting interest rates.
RBA's Interest Rate Policy
- The Reserve Bank of Australia (RBA) has been slow to adjust interest rates despite the slowing economy.
- Economists argue against rate cuts due to strong job growth and fear of inflation.
Impact of AUD Decline
- A falling Australian dollar makes exports cheaper and imports more expensive.
- This benefits local producers but can increase inflation due to import reliance.