The Australian Dollar has been on a downward spiral as it finished below US 90¢ from a high of $1.10 back in 2011. Is the Australian economy weakening, or is there a valid reason for the currency drop?

The United States economy has been recovering for the past months, making the US dollar stronger and inversely, the AU dollar fall. Because of this, our exports are valued lesser than before. It doesn’t mean that the economy is weakening, but just a ripple effect of the US and Chinese economy recovery.

As the global market changes, there will always be winners and losers in the local industry. Mining exports are expected to slow down further as iron ore prices dropped, but local manufacturers can breathe a sigh of relief as pressure from foreign competitors lessen. As for the Reserve Bank, the AU dollar drop will also relieve pressure for them to keep cutting the interest rate and may start with rate hikes as the dollar drops even further.

Read more about this on the Sydney Morning Herald website.