Falling Aussie dollar may help RBA stimulate economy

The Australian dollar has suddenly fallen to a seven-month low – and the RBA is no doubt cautiously happy about it.

The nation’s central bank has made comments for weeks that it thought the dollar was trading too high and that it was holding them back from successfully stimulating the economy. 

The Australian dollar has dropped 6 per cent against the US dollar over recent weeks and it signals a boon for the tourism, manufacturing and education industries. 

The RBA has kept interest rates at record lows to try to stimulate the economy but it has largely remained sluggish, with increasing unemployment and rising house prices. 

Governor Glenn Stevens has repeatedly expressed the RBA’s desire for the Australian dollar to drop to assist in their efforts to rebalance the economy. 

The Aussie dollar seems to finally be giving way to slowing economic activity in China, decreasing commodity prices and predictions of a continuing period of steady interest rates.

Further drops in the dollar would most likely be seen as welcome for the struggling economy while the price of iron ore sits at a five-year low.


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