What Were The Key Factors Contributing To The Strength Of The Australian Dollar?

The Australian Dollar has gained the strength significantly against the US Dollar in June. The value of the Australian dollar is influenced by the other currencies every day. Small advances are common but this month, rising up to 0.7712 high it has reached a key technical level. Now it is at the top and it is expected the same thing will be happening again.

Exchange rate is basically the price between the two currencies and it is affected by the economic stats of both countries as well as some other special factors. So, it is significant to understand the factors which are influencing the currency or exchange rates. Read on to know about the key factors that strengthen the Australian Dollar.

Demand For A Currency

The level of demand significantly influences the market place of currency.  For example, if more people are buying AUD/USD than selling then the value of AUD will rise. Alternatively, if more people are selling the AUD/USD then its value will fall.

People try to get benefit from such ups and downs and use currencies for several purposes. Travellers need foreign currencies for their international tours and some use currency to do business with their partners in other countries. They also try to get the best rates for best currency exchange in Melbourne. Investors also cleverly use the currency like when the value of USD is relatively higher than the AUD then they use AUD to buy US dollars. So all these have a major influence on the exchange rate.

Outlook For Global Growth

The global economic trends such as developments in Chinese and US economies have a great impact on the Australian dollar. Trump’s economic and political policies are greatly influencing the Asian countries and Australian outlook.

Gap Between Interest Rates

The 0.5% rise in the Australian home loans is another key factor that strengthens the Australian Dollar. This rise in the in this interest rate proved to beneficial for the Aussie dollar as it improved confidence level among the borrowers and active housing market.

Commodity Prices Rebound

Trends in Australian commodity export prices have a significant impact on the Australian Dollar. It means they have focused and given more importance to trade and the wider economy. The recent  RBA index shows 32.1% increase in terms of SDR was due to the sharp gains in ore, coal and iron prices. Such movements in commodity export prices are very important as these are the biggest export products of Australia. However, AUD will remain sensitive towards such changes.

Performance Of Asian Currencies

More than half of the Australia’s total exports are directed to the Asian countries and China is the largest trading partner of Australia. So, the performance of the Asian currencies has a direct influence on the Australian dollar. When the demand from the Asian countries will be higher the value of the AUD will go up.

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