The Australian Dollar And The Impact Of Coronavirus
The Australian dollar, just like many Australians, has suffered the impact of some major international and domestic events this year. First with the floods and bushfires, and now with the coronavirus outbreak – the trials have been clearly heaped on us.
Just like other commodity-based currencies that faced uncertainties and fluctuations due to changes in global trade and demand for oil, the Australian dollar too has had its fair share of turbulence. Added to all this is the notable effect the outbreak has had on the dollar. However, it has stayed resilient despite these challenges.
The Governor of the Reserve Bank of Australia (RBA), Philip Lowe, said (and we paraphrase) that – while the effects of the viral outbreak are only short term, the impacts have been significant. Strong action from the government in mitigating and managing these impacts has meant that we have been able to avoid the deep end of the pool to a great extent, if not altogether.
Looking back, from the beginning of the event until now when the AUD seems to be recovering from a COVID-19 induced slump – the Australian dollar seems to be well on its way, battle-worn yet emergent.
Our International Ties
The international market and trade affect our currency directly as well as indirectly. China’s fast recovery from COVID-19 and push for its economic revival has borne some very positive repercussions for the Australian dollar. Including supporting the prices of our iron ore.
At the same time, the growing pressure on the US dollar is putting us in a relatively better position compared to where we were. The increased optimism about the global economy and the rebound in equity markets are only contributing further to our resurgence.
Our Local Economy
Within our economy, the impacts have been felt by many of our small businesses that have been struggling to operate as well as our import and export industries that relied on the movement of goods between our country and others. Our unemployment rates have risen and we are seeing several other fallouts.
However, there is a silver lining. The calculated and strong action by our agencies including RBA’s rate cuts, the government’s jobkeeper and jobseeker packages, and various other subsidies and grants – such as compensation of $600 per household in WA towards electricity bills, are supporting regrowth, creating an improved outlook and strengthening the economy from within.
Among other things that may be outside our scope for the moment, it is our direct role and participation in our local economy that is going to make a real difference. It is important to consider supporting our local businesses, whether big or small, whether it is a manufacturer or a farmer.
It is also an important time to consider giving back to the community, especially to those who are struggling and unable to support themselves. It is time for the true Aussie spirit to shine in comradery and charity.
In the short term, there may be some volatility in the value of the Australian dollar until calmer waters are on the horizon. Once we’re past the current uncertainties still looming – the promise of a vaccine for COVID-19, and major global events like the deadline for Brexit and the US election, the Australian dollar is all but set to emerge and showcase its resilience.
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