The aussie dollar against the US

[burkie_21]

Will the aussie dollar go back up over the US dollar or is it going to continue to fall with the interest rates??

[Brazen]

Some economists think the intrinsic value is the 80 cent range, how long it takes to get there if ever is anyone's guess. With troubles in Euroland, China and India slowing and falling interest rates here alongside a strengthening US, I can see the Aussie tanking. But things change so fast, I might have a different view a week from now.

[flappist]

I would like to see the $AU at 50c US and 0.5 Euro for a year or two.

We NEED the export income and tourism otherwise we will end up with 3 types of people, mine workers, public vegetables and unemployed and when the mining is finished so are the first two......

[Chopped]

^ 50cents !
The Kiwi dollar would be worth about 25cents !!

The Aussie dollar will keep dropping for the rest of the year. Little by little.

[Jason[98.EL]]

how does the dollar work in this case

we export in US dollars and everyone at work states that the lower the au is against the us dollar the better

Jason

[jay289]

Originally Posted by flappist

I would like to see the $AU at 50c US and 0.5 Euro for a year or two.

We NEED the export income and tourism otherwise we will end up with 3 types of people, mine workers, public vegetables and unemployed and when the mining is finished so are the first two......

If that was to happen, all of us will be screwed.

You should think before you post stupid comments.

We already pay more for everything we buy here, what do you think would happen if your wish came true?

[SteveJH]

Originally Posted by Jason[98.EL]

how does the dollar work in this case

we export in US dollars and everyone at work states that the lower the au is against the us dollar the better

Jason

Thats right.

Say the person buying the product pays (for example) $100USD/unit. No matter what its AUD cost of the unit, the buyer will pay the same price.

Say it costs $80AUD to manufacture and ship the product.

At parity $1AUD=$1USD, then the profit is $20AUD per unit.
At $1AUD=$0.80USD, then the profit is now $45AUD per unit.

So basically the less the Australian Dollar is worth overseas, the more profitable it is to export, and the more expensive it is to import.

[flappist]

Originally Posted by Jason[98.EL]

how does the dollar work in this case

we export in US dollars and everyone at work states that the lower the au is against the us dollar the better

Jason

Putting it simply:

Australian oranges cost $10AUD a kg. At parity they cost $10USD.
If the 1AUD was 0.5 USD then they would cost $5 which would make them cheaper than other places and therefore sell well.

Of course the internet shoppers will spew as everything would double in price but they are not helping Australia so I don't care.

Foreign tourists can get lots more for their money here in the same way it is currently cheap for us to to go to Bali or Thailand etc.

Again it will not be so cheap for us to go overseas so maybe some more of our holiday money will stay here which is again good for Australia.

So basically imported things go up and local things become more competitive.

Falcons are cheaper than toyotas or whatever, our food and manufactured goods are cheaper than imported and our service industry gets a big boost.

It cannot go on for ever as we do import a lot of stuff but a year or two would not hurt.

Think of it this way. If your wage was doubled for 2 years then went back to normal how many debts would you pay off and how much would you have in the bank that you could use later.........

[SteveJH]

Originally Posted by jay289

If that was to happen, all of us will be screwed.

You should think before you post stupid comments.

We already pay more for everything we buy here, what do you think would happen if your wish came true?

We pay more because until recently were were well bellow parity with the international currencies (GBP, EUR & USD).

The AUD went up in Value, but we remained paying the same prices, the importers made more money.

Were we will get stuffed over, is if the prices of imported products go *up* to make up for the importers margins going back to where they were previously.

[flappist]

Originally Posted by jay289

If that was to happen, all of us will be screwed.

You should think before you post stupid comments.

We already pay more for everything we buy here, what do you think would happen if your wish came true?

Well the first thing we would have would be a massive reduction in bankruptcies, collapsed small businesses and unemployment that are happening all up and down the country or have you not been watching the news.......

[flappist]

You know there is an easy way to not get screwed by importers.....

BUY AUSTRALIAN

[G6ET8U]

Originally Posted by flappist

Putting it simply:

Australian oranges cost $10AUD a kg. At parity they cost $10USD.
If the 1AUD was 0.5 USD then they would cost $5 which would make them cheaper than other places and therefore sell well.

Of course the internet shoppers will spew as everything would double in price but they are not helping Australia so I don't care.

Foreign tourists can get lots more for their money here in the same way it is currently cheap for us to to go to Bali or Thailand etc.

Again it will not be so cheap for us to go overseas so maybe some more of our holiday money will stay here which is again good for Australia.

So basically imported things go up and local things become more competitive.

Falcons are cheaper than toyotas or whatever, our food and manufactured goods are cheaper than imported and our service industry gets a big boost.

It cannot go on for ever as we do import a lot of stuff but a year or two would not hurt.

Think of it this way. If your wage was doubled for 2 years then went back to normal how many debts would you pay off and how much would you have in the bank that you could use later.........

Quoted for truth.

Jack

[SteveJH]

Originally Posted by flappist

You know there is an easy way to not get screwed by importers.....

BUY AUSTRALIAN

As always, it depends on the product.

Many products, especially ones that tend to be higher in price, or technology items are not made in Australia.

[flappist]

Originally Posted by SteveJH

As always, it depends on the product.

Many products, especially ones that tend to be higher in price, or technology items are not made in Australia.

Then don't buy them, do without or buy something Australian instead.

[jay289]

Originally Posted by flappist

Then don't buy them, do without or buy something Australian instead.

Where was the computer your using made!
Show me one made in OZ, you can't

If we drop against the US dollar. we drop against all currency.

I would love to pay $2.50 per litre for fuel NOT!

[05_ENFORCER]

Dick Smith in disguise Flappy ?????


Agree with the buy Aussie stuff


.

[flappist]

Originally Posted by jay289

Where was the computer your using made!
Show me one made in OZ, you can't

If we drop against the US dollar. we drop against all currency.

I would love to pay $2.50 per litre for fuel NOT!

ME ME ME ME ME stuff everyone else.........

[SteveJH]

Originally Posted by jay289

Where was the computer your using made!
Show me one made in OZ, you can't

Correct, you can purchase an Australian Built computer, however it will be made up of Chinese, Japanese, American or European sources components.

[tranquilized]

Totally agree with Flappist - a lower Aussie dollar is good for the country. It wouldn't surprise me if the US were artificially holding their dollar down in order to help their own economy at the expense of other countries. Lots of countries do this - Thailand take steps to ensure the Baht doesn't go up in value cause if it did, it would kill its export and tourism industries.

But from a selfish point of view - I absolutely love the dollar at parity. If it falls too far, that Mustang I'm planning to buy would be out of the question. I'm about a year or two off and its so frustrating knowing that by the time I get the money together, I wont be able to afford it anymore...

The profit margins on all of the products I sell would shrink massively (music instrument accessories - US made, no other choice)

And of course overseas trips will be a lot more expensive... but I guess those road trips around Australia isn't a bad backup option.


As for what the AUD$ will do - depends on the Euro crisis and China. If the world economy doesn't completely disintegrate, and commodity prices remain relatively stable, the aussie shouldn't get below US$0.90 for a while yet. But if it does all fall to s***, Flappists US$0.50 wish could be just around the corner.

[Jason[98.EL]]

was never sure how that side of the $$$ worked

thanks Flappist and steve for the insight makes more sense now

Jason

[jay289]

Originally Posted by flappist

ME ME ME ME ME stuff everyone else.........

I forgot, I must be the only one in Aus who buys Fuel.

[SteveJH]

Originally Posted by flappist

ME ME ME ME ME stuff everyone else.........

Meh, if I want it and it can be sourced in Australia, i'll buy it.

However if it has to be sourced overseas and I want (or need) it, and I can afford it, i'll still buy it.

Will you do without a new mobile phone because they are not Manufactured in Australia? Will you go without a new engine in your plane (assuming you own one) because its unlikely to have been sourced in Australia (unless powered by a jabiru engine).

[gtfpv]

NO WAY . I buy my hobby planes from overseas in us dollars at half price , we already pay worlds highest interest rates , and high prices in comparison to other western nations . immigrants come here uninvited , 600 last week @ $50 000 per head , and i have to pay for that , leave my dollar high so i can save 50 bucks a buy on model planes .

[BHDOGS]

I suppose once the aussie dollar falls all those products that are imported now that cost alot will drop accordingly? yeh fat chance for us consumers but businesses will be happy because they charge us the same and make more money whoopie do for them. Id rather keep it where it is and have some relief from my wallet for a change.

[flappist]

Originally Posted by jay289

I forgot, I must be the only one in Aus who buys Fuel.

No but there are hundreds of thousands of Australians who cannot afford to pay $1.50 for fuel anymore as they have lost everything including their jobs.

Big picture, how much fuel do you actually use in a year?

$5000 worth? Is that was suddenly $8000 (and it would not be as fuel prices are artificial and based of demand) then you have $3000 less to spend.

If on the other hand your wage went up $4000 and the price of food, electricity,
rates, water, beer and all the other essentials went down you would be a lot better off.

Oh and I am writing this on my 6 year old HP XW6400 workstation.

I think I could probably survive two years without buying 3 new phones, 4 new ipads, 2 new game consoles and of course the latest gollywog sooper dooper gamer PC.......

[SteveJH]

Originally Posted by BHDOGS

I suppose once the aussie dollar falls all those products that are imported now that cost alot will drop accordingly? yeh fat chance for us consumers but businesses will be happy because they charge us the same and make more money whoopie do for them. Id rather keep it where it is and have some relief from my wallet for a change.

Imported products will cost a business more in real terms with a lower dollar, to maintain current profit margins they would have to increase prices.

Hopefully their current pricing structures take into account currency fluctuation and prices will remain the same!

[sgt_doofey]

What flappist is trying to say is that Australian companies need the Aussie dollar to be a lot lower to be able to compete in international markets. The Australian market is only so big and the international market is a hell of a lot bigger!
As an example, my wife is a winemaker and their US exports tanked big time when the US dollar crashed and the AU dollar became strong. This is because a cost of a bottle of wine that used to sell for a lot less in the US has now skyrocketed in price over there, meaning they just aren't selling Australian products overseas anymore. With the AU dollar dropping, these products now become more attractive to overseas buyers and Australian companies start selling more of their products, which in turn means increased employment as the companies now need more staff to produce a higher volume of whatever they are selling overseas. The cost of the product in Australia isn't going to change, but they're market increases with more things being sold overseas.
Now, stop and think of how many things Australian companies export their products overseas? Wine, beer, live cattle, fruit, wheat, food, cars, Ugg boots??? These are the people that have been struggling with a high Aussie dollar.

[tranquilized]

Originally Posted by BHDOGS

I suppose once the aussie dollar falls all those products that are imported now that cost alot will drop accordingly? yeh fat chance for us consumers but businesses will be happy because they charge us the same and make more money whoopie do for them. Id rather keep it where it is and have some relief from my wallet for a change.

Ummm I think you have it a bit confused... If the aussie dollar falls, the price of anything imported RISES

Your cynicism is fair enough though, its quite clear that as the aussie dollar goes up - import retail prices remain the same (profit margins for importer and retailer go up) Aussie dollar goes down - import retail prices go up (to maintain importer/retailer profit margins)

Think about how long the aussie dollar has been at or above parity with the US$ Its only more recently that retailers are dropping prices cause so many people are just buying direct from overseas online.

There are a lot of downsides to having a high AUD$, but the struggling retail sector is not one of them IMO. They need to adapt. They need to actually offer the consumer something in the way of service or expertise in order to justify the higher price than can be had online.

Harvey Norman is a good example. He's been bleating on about the lack of GST on private imports under AUD$1000 etc etc. I was in there the other day looking at TV's. I asked the salesman what the difference was between an $800 Sony and a $2000 Sony, both on display. He went silent for a while, then said the difference is the $800 one is cheaper. I laughed at him and walked out. What is Harvey Norman offering the customer? Why would anyone buy anything from there unless they wanted the interest free finance?

On the other hand, sticking with Harvey Norman - he's opened a new site - Harvey Norman Kitchenware. Its an online store only - no store front and staff overheads. The prices are unbelievable - you wont find kitchenware cheaper anywhere else. Its a great example of a local retailer adapting and giving the market what it wants. Wont do much for the unemployment numbers, but hey, maybe traditional retail will join the hundreds of other industries that have died over the years...

[FPV8U]

If lower interest rates mean a lower AUD i'll be happy to see it, the Retail sector needs it, small business is screaming for it and as has been said Australias export market has all but died, hell if Imported cars were a little dearer perhaps Even Ford AU & Holden will have things pick up.

I buy stuff from overseas aswell when i have too, but i'll pay a higher price locally if it means i still have work or a job to bring in an income for me to pay for it.

[flappist]

Why is it wherever many of you think of business you think Harvey Norman or Petrol Companies?

Go for a drive tomorrow down the main street of where ever you live and look at all the cafes, little shops, restaurants, mechanics, panel beaters, fruit shops, pubs, petrol stations, motels, computer shops etc etc etc.

This is where MOST people are employed and the vast majority have only a few maybe up to 20 people working there.

These are the ones that are suffering especially those that are not in a mining area or a public servant area.

How many of your friends or relatives work for SME?

If we don't export goods and import money we will all eventually end up like Greece, Spain, Portugal, Italy or Ireland.

P.S. Moved thread to Bar