The Australian dollar has fallen below US90 cents for the first time in six months and could head even lower, a prospect that has been welcomed by industry, retail and farming groups.
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The local currency hit a low of US89.90¢ in late afternoon trade on Monday.
This new low point follows the Aussie dollar’s largest five-day fall last week – from around US94¢ – since November last year.
Although not discounting a rebound, economists believe the currency has begun closely tracking basic economic indicators, such as the price of iron ore and coal, which together account for about a third of Australia’s export revenue.
The falling dollar has many implications for Australian companies.
The Australian Chamber of Commerce and Industry said the fall in the dollar would assist exporters and import-competing businesses, but for other businesses, it could lead to extra costs.
Imported machinery, for instance, will cost more.
NSW Farmers Bathurst Branch president Ian Hendry said a lower Australian dollar will be helpful for grain and livestock exports.
“Australia relies a lot on that,” he said. “The lower dollar can only help us.”
Mr Hendry said fortunately commodity prices have been pretty good lately. He said cattle were holding up well and sheep prices are also okay.
Mr Hendry said this is because many people cleaned out a lot of stock in the dry, while the demand stayed the same.
“If we have a good harvest, the lower dollar will certainly help sales,” he said.
Mr Hendry said a lot of Australian wheat, barley and cotton are sold overseas and the falling dollar will help with those exports.
It will also assist the live cattle and sheep trade.
“It will set a base for the domestic trade if we get good prices for our exports,” he said.
“Now all we need is some more rain.”
Bathurst Business Chamber president Angus Edwards agreed that exporters and farmers will be happy with the falling dollar because it will make our exports more competitive.
A lower Australian dollar might also encourage more people to holiday in Australia rather than go overseas, he said.
Mr Edwards said internet sales from overseas suppliers could also slow because consumers would find their prices are no longer competitive.
“I think we will find people aren’t prepared to wait weeks for products when there is no real monetary benefit,” he said.
“It will put local business back on a level playing field.
“However, the dollar will have to fall a long way before we see a significant impact.”