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Money: A$ Starts 2011 On A High

  • January 1st, 2011
  • Posted by EUEditor

doillar-australian2.jpegThe start of 2011 sees the trade in money tilted against the Euro after a year of economic and financial crisis for some of the European Union states – and the Australian dollar at new strength.

“AUSSIE” APPRECIATES

The Australian dollar was higher over twelve months against all other currencies, its general value appreciated by 15%, the world’s second highest rise after Mongolia.

The strengthening of the dollar is being attributed to in part, extended sales to China, getting an advantage from economic stimulus policies there. (The same applies to resource rich Mongolia).

It is being seen also as a stable refuge for investors put off by uncertainty with the Euro and American dollar.

Rates for the A$ on 1.1.11:-

A$1 – EU 0.764181 (most usual rate over five year periods 0.60)
A$1 -  $US 1.02 (most usual 0.75)
A$1 – GB 0.655414 (0.40)

Against regional currencies, it is at NZ$1.31328 (1.20), PNG Kina 2.6544 (2), and Singapore SG$1.31163 (close to parity circa 2005).

Consumers in Australia during the festive season could note attractive prices coming through for quality “Euro” products, ranging through from chocolate, to champagne and cars.

At the time that the A$ reached parity with the American currency last October (see EUAustralia Online, “Money changes …”, 15.10.10), analysts described the strength of the Australian currency as “structural and cyclical” — its value linked to the strong demand for commodities exports, (notably coal and iron ore for China), and an expectation of  higher interest rates accompanying growth.

Since the Australian dollar was floated on world money markets in 1982, it has mostly settled at around $US 0.75, although sinking for sustained periods to $US 0.55, (to the satisfaction of exporters, and the large education sector;  if not travellers, and buyers of goods and other services abroad).

EUROS AND THE YANKEE DOLLAR

By the start of this new year, some positive economic performance indicators from the United States had seen a revival of US dollar values, with expectations of fresh gains in 2011.

“The U.S. dollar ended a volatile year on Friday a bit firmer than where it began with investors gearing up for gains in early 2011 on expectations the U.S. economic recovery was gaining momentum”, said an analysis from  Reuters.

The Euro was considered likely to stay under pressure, “as the market focuses on Portugal, Spain and other Eurozone countries struggling to address debt and banking problems.”

The European Central Bank wants to moderate that view.

Its President, Jean-Claude Trichet, said in the lead-up to Christmas, problems were with financial instability, rather than  with the Euro itself , which was a credible currency.

He said European leaders would need to follow their agreements made in  2010  on financial management, especially by controlling budget deficits.

Reference

AustralianHerald.com, Sydney, “Euro value still intact says ECB”, 21.12.10. http://story.australianherald.com/index.php/ct/9/cid/3a8a80d6f705f8cc/id/722504/cs/1/, (1.1.11).

Wanfeng Zhou, “FX OUTLOOK-Dollar up in 2010; gains seen on recovery hopes”, Reuters, London. 31.12.10.
http://www.reuters.com/article/idUSN3114022820101231, (1.1.11).

XE Corporation, ON,ca,  XE – Full Universal Currency Converter, 1.1.11. http://www.xe.com/ucc/full/, (1.1.11).