The Australian dollar has seen remarkable recovery since the 30% decrease. It is almost square with the US dollar. This has happened for the first time since 1982. This shows the strength of the Australian economy in the current scenario.
What are the reasons for this strength? There are many:
- The Asian Connect – Australia is benefiting from the Asian economy. Asia is one of the fastest growing region of the world, and strong ties at the right time has helped Australia to grow as well. The demand for Australian goods in Asia is pushing the AUD to become stronger.
- Volatile US and EU – The volatility of the markets in US and the EU crisis has made Australia a place for safe investment. The stability of the Australian economy has helped in rise of the Australian Dollar.
- Healthy Economy – The healthy state of the economy in Australia is the main reason for the strong currency. When the whole world was reeling from the slowdown, Australia was the least affected. The reason being strong policy measures.
- Demand of mining products – The Asian countries are towards commodity intensive stage of growth. Hence the demand for mining products is more. This has led to mining activities increasing in Australia. Strong demands from China is driving the mining industry. This helps the rise of the currency as well.
- Reserve Bank holding off – The Reserve bank has desisted from cutting interest rates. This has shown positive results with the Australian Dollar reaching parity with the US dollar.