According to the AUD/USD chart, recognised and approved by Australian security Exchange, Australian dollar has been falling down since August 2011, which at the time was 1.10780 at its highest. However, there has been times when AUD believed in the Australian dream and tried to rise again. Although, negative factors overweighed the rising movement. At the time of writing this article, AUD is struggling to maintain its value at 0.69200 (10/July/2019).
This has been happening while the Reserve Bank of Australia (RBA) has, and most likely will again, cut down the interest rate, hoping to see the rise of Australian dollar by preparing a better atmosphere for businesses and investors, resulting in more opportunities to be created for all Australian workers, which in return would maintain a healthy cycle of money in our economy when people earn and spend more. It worked out in AUD’s favour for twelve days, rising from 0.68522 on 16/June/2019 to 0.70202 on 28/June/2019. After the period above, poor AUD started to fall again.
The last two cuts has brought the Interest Rate to the historic lowest rate of all time for Australians, to 1.00%. The big four banks has lowered their rate which is a good news for investors and business owners, as well as those who pay mortgage. Two cut rates in a row! Shall we celebrate and propose a toast to future cut rates or be concerned about the economy? One reason to be concerned could be the last back to back cut which happened in 2012 when there was a fear of recession. Could this be an indicator of a bad economy?
On the other hand, Westpac Consumer Confidence has been falling down even after the cuts, which suggests that the negative factors overweighed the cuts, resulting in AUD falling once again.
Why is this all happening to AUD and us?!
First we’ll take a look at the following points:
- Decline in loans granted, resulting a decline in the currency generated. (Money is generated when loans are granted).
- Less Capital Growth Tax (CGT), resulting a decline of government’s revenue.
- Less stamp duty paid, resulting a decline of the government’s revenue.
- Less revenue for real estates, property investors, and developers, resulting in less employment opportunities in those industries.
Chinese investment in Australia has declined by a large shocking figure of 36.3 percent equal to $8.2 Billion in 2018, thanks to APRA and the ROYAL COMMISSION, claiming to help and “protect” the young Australian first home buyers by increasing stamp duty for foreign buyers, restricting Property Investment loans by strict regulations making things difficult for Property Investors, as well as making the atmosphere unsafe for foreign property investors (mainly the Chinese), through the Australian media. And it all has been backed up by enthusiastic Australian regulators who seem to believe that removing all foreign investors from the picture is more important than a prosperous economy. Unfortunately, this ideology has clearly backfired.
As we all know the role of the Royal Commission is to create a safer environment for a prosperous future for our industries and our economy as a whole but instead, wherever they set their foots, not only they don’t accomplish their purpose but they even disrupt the flow of our markets and create unnecessary conflicts which all together, set our economy backwards.
In conclusion, it’s quite strange how these organisations, whose purpose is to flourish our markets and economy, and improve the lives of us all Australians, are taking destructive steps towards the opposite direction and sending our industries back in time. Now one thinks to themselves, what could be their TRUE purpose?!
Author: Sam Samie