Value of Australian Dollar

Value of Australian Dollar

I have decided to pick topic Value of Australian Dollar in my assignment. 

Value of Australian dollar is pretty high and uncomfortably high value of dollar cannot last forever. Australian dollar is overvalued and everything in country is getting so expensive and companies cant wait longer for dollar to fall. 

I have decided to pick this article written by Tim Colebatch in which he writes that Reserve bank should intervene to push down the Australian dollar.

http://www.smh.com.au/federal-politics/political-opinion/reserve-bank-should-intervene-to-push-down-the-australian-dollar-20131111-2xcak.html

In the words of Mr Colebatch in his article writes:  “in many countries, central banks intervene or governments change laws to hold their currencies down, and ensure that producers remain competitive. But in Australia, it is conventional wisdom that the Reserve Bank and the governments must let the dollar float freely (apart from occasional raids to stop it falling too low)”.

“We are allowing a temporary over-valuation to shut down economic capacity permanently. This is not how the successful Asian economies operate”.

He also comments manufacturing: “The car industry is the most important battlefront. It has been hammered since the dollar began climbing, and consumer tastes switched from Holdens and Falcons to imported SUVs. Since 2005, the local manufactures share of Australian vehicle sales has shrunk from 25 per cent to just 10 per cent. 

Mr Cobebatch concludes in his article: “First, the Reserve should intervene in the market - either by pushing back against the currency traders as they push the dollar up, or by setting a ceiling for the exchange rate, as the Swiss do, and selling dollars to keep it down”.

Conclusion to value of Australian Dollar is that we need balance in economy and we will need lower level of exchange rates.

 http://www.abc.net.au/news/2013-12-17/business-in-90-seconds/5162476

How does the topic I chose affect supply and demand?

There are so many factors which are affecting value of Australian dollar. 

Floating exchange rate is one of the largest supply and demand factors which determine the dollar’s equilibrium price and can cause changes in the equilibrium exchange rate. 

Intervention in the market by the Reserve Bank of Australia can affect the supply and demand of Australian dollar.

Another factor is from investors who wish to invest in Australia and need to convert their currency into AUD they will affect demand for the dollar.

Will supply increase or decrease? Why?

Will demand  increase or decrease? Why?

http://www.abc.net.au/news/2013-12-05/global-demand-for-dairy-products-is-exploding/5138996

Will jobs increase or decrease in Australia and why?

Well, lately jobs in Australia decrease and we can hear that in every state of Australia unemployment from month to month rises. 

What are the reasons and factors which affects jobs?