Exchange Rate + AUS Export

[Jubair]

What does this phrase mean: "..Australia's exporters are selling more but earning less...".

Also what are the circumstances that cause the AUS dollar to fluctuate against the US dollar? anyway ideas??

 

[Paris75]

As for the phrase I am assuming that it means they are selling more of their exports but at a lower price, hence cutting down their margins.

The second part, exchange rate fluctuation is not easily answered. There are many many factors which can affect it, interest rates, demand for import/exports to name a few.

 

[Frodo]

Yes, most commodities are sold in USD. So we may sell 10% more wheat overseas, the USD amount is 10% greater. But if the A$ has risen 15% against the USD the amount of A$ received is 5% lower.
Of course this leads to world price rises in USD , as we are seeing with iron ore, gold etc,. In fact you can see on a daily basis the A$ move against the USD as the price of Gold changes.

So, the main reason for fluctuations is the demand for our resources, a booming world economy (china leading the way) means greater demand, which leads to increased prices, which leads to a higher A$

 

[Jubair]

With the increasing price of the AUD, people who r looking to buy AUS goods will be deterred because the AUD is so high compared against their currency. This causes a fall in the income from exports and I heard once Peter Costello said that the AUD may start to fall again because of the loss in export gains.

 

[Frodo]

With the increasing price of the AUD, people who r looking to buy AUS goods will be deterred because the AUD is so high compared against their currency. This causes a fall in the income from exports and I heard once Peter Costello said that the AUD may start to fall again because of the loss in export gains.

Yes, but only in USD tied currencies. Against others like the Euro and GBP we are weaker.

What Costello has to be concerned with is that if the A$ falls then imports will be more expensive and inflation will rise. The result of that is an increase in interest rates which again drives the A$ higher.

 

[BB gun]

Yes, but only in USD tied currencies. Against others like the Euro and GBP we are weaker.

What Costello has to be concerned with is that if the A$ falls then imports will be more expensive and inflation will rise. The result of that is an increase in interest rates which again drives the A$ higher.

the dollar has increased with the expectation of increased in interest rates