A lift in Australia’s unemployment data has hurt the dollar, pulling it down to its lowest point since the beginning of 2016.
The dollar hit $US0.688 on Friday morning, a price not seen since January 16, 2016.
Peter Marshall, banking expert at financial services comparison site Mozo, told The New Daily that these falls could be attributed to two recent economic developments: Weakness in China’s economy, and a lift in domestic unemployment.
“The Australian dollar was pushed really high a few years ago, economic conditions were very stable and the dollar was seen as being quite safe,” he said.
“We now have a lot of exposure to economic risk, and aren’t seen as being the safe haven that we used to be.”
Price increases on the cards
The drop in the dollar will likely push the price of certain goods –particularly discretionary items upwards – Mr Marshall said.
“How much this will affect you will depend on how lucky you are to be able to make those discretionary purchases,” he said.
Travel will also be affected by the increase, and international trips have already “become a lot more expensive than they were even last month,” he said.
However, there are ways for would-be adventurers to protect themselves from exchange-related losses.
Mr Marshall said travellers should consider pre-paid currency cards, which will allow them to lock in the price of the dollar before it changes again so they’re aware of exactly how much they’re spending.
The other option is to use a foreign currency bank account, which several Australian banks offer.
Those looking to purchase goods from overseas will have to either buy now, or wait out the current lows.
Stocks hit decade highs
As the dollar fell, the leading Australian stock index – the ASX 200 – reached briefly rose to its highest level in the past 11 years at 6396.2 points.
All sectors except for financials saw improvement, with technology stocks leading the rally, gaining 2.42 per cent by the middle of trading.
An update published by Commonwealth Bank securities trading arm CommSec at lunchtime on Friday noted that mining and energy stocks had also played a significant role in the gains, partially off the back of a strong iron ore price.
“The banks have been the main weight on the Australian sharemarket this week as four of the big five banks went ex-dividend,” the report added.
“While none of the majors are ex-dividend today, ANZ is leading them lower, sliding by 2.3 per cent. Not including the banks the ASX 200 would be up another 13 pts.”