News Summary: 'Aussie Dollar Battles Against Global Forces'

1.) The Australian dollar has lost more than eight percent against the U.S. dollar in the last month, and this decline does not appear to be over any time soon. Currently, there is not a lot of enthusiasm from investors to buy the AUD (Australian dollar) due to an "increased disappointment in the global recovery, the high cost of Australian commodities, and the increasing popularity of the U.S. dollar". The future of the Australian dollar seems gloomy when the recent rise in Japanese government bond yields and the possibility of false Chinese economic data are also factored in. If the United States confirms the beginning of the slowing down of the U.S. Federal quantitative easing program, the AUD could possibly fall to as low as nine U.S. cents. However, if they dismiss this, then the AUD could jump swiftly back up to around ninety-nine U.S. cents. China has had a key affect against the Australian currency. Many economist doubt that Chinese exports have grown seventeen percent in the past year. Some suggest that the actual growth is only half of what was reported. There has also been a loss of buying interest from Japan because Japanese investors have found better opportunities in their own country or elsewhere. "In a sobering assessment, the consultancy says: 'There was little sign in the April data of a meaningful recovery after the weakness of the first quarter.'"

2.) This article directly relates to the effects of the Australian dollar on the Australian economy and how Australia competes globally. Due to the increase in the Australian dollar, Australian's are more inclined to buy things from overseas which creates problems for the retail market. The tourism industry has also been directly affected by inflation. Foreign tourists were not traveling to Australia as often because of the high costs, and Australian's were more likely to travel outside the country rather than within it. The automotive industry faces a real threat because it is much cheaper to import foreign cars than it is to produce cars in Australia. Eventually, the collapse of the Australian automotive industry seems to be a very real issue.

3.) This inflation has been caused by the questionable Chinese economic data, the decrease in Japanese investment, and the increasing popularity of the U.S. dollar. Some economists suggest that tax reforms should be introduced as well as an increase in investments in innovation and infrastructure development. The idea of these investments is to attract more foreigners to Australia and make Australian business more competitive. Inflation and interest rates need to be stabilized by a stable fiscal and monetary policy. Somehow, the value of the Australian dollar needs to be stable in order for businesses and people to invest in the economy with confidence.

The dollar's dive looks far from over, even though it has already lost more than 8 per cent of its value against the US dollar since the middle of last month.