How to calculate the price of a dollar to dollar exchange in South Africa
AUSTRALIA has become the first country in the world to issue its currency by direct debit and has been the first to do so in a bid to fight inflation.
Key points:The Australian dollar is pegged to the US dollar, so when it drops in value it will affect your spending dollars in the US DollarZone:It means Australians will have to make a cash withdrawal from their bank account every month to buy the same amount of dollars the US dollars currently areThe move has caused a major disruption to the Australian dollar’s value as it dropped from $US1.1335 to $US0.9335 by mid-December, according to a report by The Australian.
“The Australian economy is in a great place, the global economy is great, the international market is great.
So why would we want to see it get even lower?”
Reserve Bank governor Glenn Stevens said.
The move is expected to cost the economy about $US15 billion in lost GDP per annum by the end of the year.
The US has already been in a similar predicament, with its dollar dropping by $US5.8 billion in December and now $US6.1 billion in a fortnight.
The new rate will cost the Australian economy $US11 billion by the first quarter of 2018, the Reserve Bank’s annual update to the Monetary Policy Committee said.
“It is important to note that the exchange rate is determined by the central bank, not by the market, and that is why it is such a critical part of the economy,” the report said.
It also said that a lower exchange rate would have a negative effect on exports, with a lower dollar leading to a reduction in export volumes.
The Federal Government will continue to hold an interest rate of 2 per cent on the US currency and the Reserve is likely to hike the Reserve’s key interest rate to 5 per cent in the coming weeks.
But Mr Stevens said there was no guarantee that the Reserve would follow through with that decision.
“We are not going to change our policy because of the current rate, and we are going to hold it where it is,” he said.ABC/AAP