Aussie dollar hits three-year low, as China economy falters
by Beef Central (Australia)
03 January 2019
THE Australian dollar hit a three-year low overnight, dropping below US70c for the first time since 2016.
Weak Chinese economic data, rising trade tensions between China and the US, and a stronger US dollar sent the local currency as low as US69.8c during overnight trading. The dollar has since recovered a little, trading at US69.95c this morning.
It means the A$ has fallen about 11.4 percent against the US currency compared with this time last year.
This time last month, the A$ was still worth around US73.8c. A year ago it was trading above US78c, with a 2018 peak above US81c in late January.
Lower currency value is advantageous to Australian red meat exporters, making Australian beef and lamb more competitive against US product in international markets, mostly traded in US dollars.
The Australian currency has also faltered against Asian currencies tumbling to an intra-day low of 104.96 Japanese Yen this morning, its lowest point since March last year. The A$ has fallen 15.4pc against the Yen in the past year.
Analysts attributed the sharp drop in currency value to Chinese manufacturing data that came in weaker than expected. Data released on Wednesday showed that China’s manufacturing sector contracted for the first time in more than 18 months, partly impacted by the trade dispute with the US. Economic growth in the September quarter was the lowest in 25 years.
If the US lifts interest rates several times this year as predicted, more pressure could be put on the A$ as investors move their money to the US to get better returns, an analyst said. The Reserve Bank of Australia has held rates at a record low level of 1.5pc since August 2016.
China’s Shanghai Exchange was the worst-performing major stock market in the world last year, trading about 27pc lower than at this time last year...