Australian Dollar Hits Another Low

WEST PERTH, AUSTRALIA, June 27, 2013 (Press-News.org) Reports on Monday hit again, following the decline in value of the Australian dollar the week prior, and the dollar is now trading at it's lowest for almost three years.

"The falling dollar should help the transition from mining investment to broader based growth in the economy," says Federal Treasurer Wayne Swan.

The Australian dollar was trading one Australian dollar to every 92 US cents on Monday.

There will be a conference on Tuesday in Canberra where Mr Swan will tell the participants that a declining AUS dollar is positive as the nation's terms of trade has weakened, the US is currently in the infancy of a "very long journey back to normal monetary policy settings."

The high dollar has helped with inflation and has kept it contained, allowing the Reserve Bank of Australia to reduce interest rates down to some of the lowest levels on record.

Immediate effects of the dollar' decline are seen primarily with the public whose wealth is worth less when buying from the US and when travelling to the USA. Some Australian's are feeling the pressure as the currency weakens and there are a number of people applying for finance and having to use these options in order to facilitate international travel.

Every day effects are that there are people using credit cards or sometimes getting a cash loan in order to facilitate their travel commitments. Also, online shopping is bound to take a hit because the products that people were purchasing online and shipping over from America will be more expensive with the conversion rate, therefore it may actually end up being better for the economy as more people may choose to purchase some of these products locally, instead of shipping them in.

Of course other emergencies and events that come up can also mean that Australians are more inclined to borrow money. And payday loans are becoming increasingly popular amongst the population as a way to get cash rapidly.

But aside from the general public using finance and the popularity of loans products, Swan will tell the Committee for Economic Development of Australia "With a cheap currency, I doubt we could have got through such a big investment boom without high inflation and higher interest rates. Instead, we've been able to successfully manage the investment boom without feeling a lot of the pressures we experienced in earlier commodity price booms such as the early 70s and 80s" at the state of the nation conference.

Labour's productivity growth improvement recently reassures Swan and he states "we are not running out of puff".

Mr Swan believed that the two per cent gain in labour productivity in the market sector through the year to March is the beginning of a sustained improvement and was above the average of the last decade.

He estimates it will be two years or more before mining investment begins to lessen, but is confident that it will be enough time for other investment components to take up the slack.

The major surge in mining investments recently is generating a large increase in mining exports already.

"Iron ore exports are still ramping up, and we've barely begun to see the boom in LNG exports from massive investment in new extraction and processing facilities," he says.

New (LNG) liquefied natural gas facilities will get produced soon, estimates of 2014 to 2015 to be the start of production. LNG exports are predicted to grow by nearly 120 per cent over the next three years.

"On these forecasts, Australia should become the world's largest LNG exporter by the end of the decade," he says.

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