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AverageJoe

43,655 Posts.

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31/01/19

16:11

Post #: 37284763
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Originally posted by Aqua65 ↑

Always has been played with- AUD is fairly liquid , but also easily manipulated by huge money ( especially out of hours to the Australian market!! )

It’s terrible . But just ‘is’ .
This is my opinion .
It has always been a challenge for Australia’s primary producers and exporters .
Unpredictability- of the currency exchange rate , forwards . Yet very significant for Returns .
( having said this - a low AUD may be great for final return after sold in USD , but is very bad for input major expenses , due to import prices rising commensurately. Machinery , parts for upgrade and maintenance expenditure , fuel also ! unfortunately- generally also then higher priced , often . ).

More than fundamentally- although AUD heftily traded . Is used as a proxy for Asian market concerns or boom also . Fundamentally matches- with demand or not for the Aussie dollar , as our export strength is highly linked to export volume and strength to Asian ports . Greater exports at higher prices — leads to higher demand / need for Aust Dollars , and vice versa.

As a proxy - therefore, generally an immediate selldown or an appreciation in AUD - occurs ;
speculatively as well as fundamentally as a ‘proxy ‘ for Chinese economic prospects .

Can’t do much about it.
It is just how the AUD is dealt with internationally .

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Accordingly the 'heavily' traded currencies should not have a manipulation tag. Even BOJ can't manipulate their own currency for any length of time to favor their internal agenda be it strong or weak Yen.

Weak AUD favors exporters and strong one favors importers. I am not sure what the sweet spot of FX rate is. From a gold producer perspective (locally) 5 handle on AUD is desirable for those margin explosion! I like to see multi baggers on the locals that I hold.
3 Upvote

0 Great analysis

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