Australia's Exchange Rate (HSC SSCE Economics): Flashcards
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Practise the cards
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Role of exchange rate in Australia's economy
Role of exchange rate in Australia's economy
Channel for all trade & financial transactions with other countries
AUD global ranking among traded currencies
AUD global ranking among traded currencies
5th most traded (after USD, Euro, Yen, Pound)
Main cause of AUD volatility
Main cause of AUD volatility
Heavy dependence on commodity exports
What TWI (Trade Weighted Index) measures
What TWI (Trade Weighted Index) measures
AUD against basket of major trading partner currencies
Key driver of AUD appreciation 2003-2011
Key driver of AUD appreciation 2003-2011
Surging Chinese demand for natural resources
How floating exchange rate stabilises economy
How floating exchange rate stabilises economy
Depreciates in weak times → exports cheaper → boosts activity
Two external stability impacts of exchange rate
Two external stability impacts of exchange rate
Balance of payments effects & foreign debt servicing costs
Vicious cycle of depreciation sequence
Vicious cycle of depreciation sequence
Initial fall → investor fear → capital outflows → speculation
RBA interest rate change 2008-2020 period
RBA interest rate change 2008-2020 period
Reduced from 4.75% to 0.1% (by November 2020)
Debt servicing cost change 2021-22 to 2022-23
Debt servicing cost change 2021-22 to 2022-23
Nearly doubled from 18 billion to 33 billion