Hello everyone! The Australian dollar has plunged against most currencies. It has fell to its lowest since early April 2020, was last down 4.42% at $0.60490 against the American dollar (USD).
What matters most to me it's AUD to EUR, I haven't exchanged my AUD yet, and now I regret. It has dropped to 1 AUD = €0.55. 😭
Any financial gurus out there? What are your predictions?
According to AI, this is the response I got.
Reasons for AUD Weakness Against the Euro
Economic Dependence on China:Australia's economy heavily relies on commodity exports, particularly to China. The ongoing economic slowdown in China has reduced demand for key Australian exports like iron ore, impacting Australia's foreign currency earnings and weakening the AUD.
Global Trade Tensions:
Trade disputes between the US and China have created volatility in global markets. Since the AUD is often viewed as a proxy for the Chinese yuan due to Australia's trade ties, instability in China's currency has negatively affected the AUD.
Fiscal Challenges:
Rising public debt and persistent budget deficits in Australia have undermined investor confidence in the country's fiscal management. These fiscal imbalances are contributing to downward pressure on the AUD.
Interest Rate Differentials:
The Reserve Bank of Australia's (RBA) monetary policy decisions, including relatively lower interest rates compared to the European Central Bank (ECB), have reduced demand for AUD-denominated assets, further weakening the currency.
Commodity Price Volatility:
Fluctuations in global commodity prices, particularly coal and iron ore, have hurt Australia's export revenues, exacerbating pressure on the AUD.
Predictions for AUD/EUR Exchange Rate
Forecasts suggest moderate fluctuations throughout 2025:According to National Australia Bank (NAB), the AUD/EUR exchange rate is expected to hover around €0.61–€0.63 during 2025.
Month-by-month predictions indicate slight dips in mid-2025 but potential stabilization by year-end.
Outlook
While some improvement in AUD/EUR rates may occur later in 2025 due to potential global economic recovery or favorable commodity price trends, persistent fiscal challenges and China's economic slowdown could keep the AUD under pressure in the short term. Investors and businesses should monitor RBA and ECB policies, as well as global trade developments, for more clarity on future trends.
If we remained on a gold standard it would never have been possible for the financialisation of the economy to be leveraged so much that houses in country towns cost $1 million. The Australian dream is dead, a smaller middle class means less consumers, a smaller economy, and a lower quality of life for everyone, not just the poorest.
Unfortunately we still have a lot of entitled morons that think the problem with our economy is too much welfare, they want to accelerate the wealth divide further.