The Australian Dollar, On The Right Path?

The Australian Dollar, On The Right Path

Today, the Australian dollar was one of the top movers as the Central Bank decided to cut again the interest rate, reducing it to an historical low, at 2.5%. Even if this decision makes the Aussie dollar depreciate and therefore makes it less attractive for the investors, it is intended to help the economy get back to growth. Lately, Australians have had a less encouraging economic climate as the country’s economy kept deteriorating. One of the major concerns is the growing unemployment rate which pointed to 5.7% as well as a serious breakdown of the mining industry.

As two of the core industries are the coal and iron ore, a slowdown of one of them is seriously affecting the overall picture. China is at fault for these negative news, as its economy is cooling. If previously they used to invest significant amounts of money in their infrastructure and building factories, increasing the demand of natural resources from Australia, now, the leaders of China would rather not to boost the economy for a while. The slowing down of the mining industry is expected to cause further damages like: increasing the unemployment rate, reducing the investments, affecting the exports and the price of these resources. On the medium term (until the final of 2013), the Australian economy will be closely watched before additional measures will be taken, as they are not excluded.

 

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