For years, the Australian Dollar has been relatively flat and its rise and fall have been similar to other major currencies in the past few years. However, over the last two months, the Australian Dollar has increased by about a third on its strength against many of the major currencies including the US Dollar, Euro and the Japanese Yen. As these currencies have become more stable in the past few months, the Australian Dollar is no longer moving so rapidly in the same direction.
In response to rising unemployment and economic conditions that are affecting consumer spending, the Australian Federal government has adopted a plan that will significantly increase the amount of money that it distributes to Australians in order to keep spending in check. Although this will have an impact on how much of an impact the increasing Australian Dollar has, many experts still believe that the currency is in a state of “overheating.”
One reason that the Australian Dollar is experiencing this overheating situation is due to the current global economic situation. When the global economy is experiencing trouble, countries and industries are forced to cut their expenses and cut back on spending. This leads to lower levels of consumer spending and higher levels of inflation. The increase in inflation causes the Australian Dollar to increase against these other currencies because the more money that consumers can purchase for a lower price, the more money they are willing to spend.
The current condition in the economy is also leading many experts to predict that the Australian Dollar will continue to rise in the coming weeks as the effects of the global economy begin to show. This prediction of an increase in the Australian Dollar may be short lived as many analysts feel that the economic conditions will stabilize and the currency will begin to fall back towards its previous values.
Although some believe that the Australian Dollar may not actually be affected by any of the major economic issues that are currently affecting the world today, others believe that the currency could see a sharp increase if the United States Federal Reserve raises interest rates. This prediction is based on the belief that when the Federal Reserve raises interest rates, there is a possibility that the price of the Australian Dollar will increase due to an increase in demand for Australian Dollar.
However, many experts disagree with this prediction and feel that although the United States Federal Reserve may increase interest rates, this may only be temporary in nature and will not cause any significant change in the direction of the Australian Dollar. in a short period of time. In addition, most experts feel that when the United States Federal Reserve does raise interest rates, there will be a significant drop off in the demand for Australian Dollar after the United States Federal Reserve increases rates and this will lead the Australian Dollar to decrease against many other major currencies.
The Bank of Australia or the Reserve Bank of Australia has not yet released its official rate decision or statement on the subject of the Australian Dollar and its rate. However, some have suggested that the Bank of Australia may be holding its next rate announcement until its October announcement. This is due to the fact that the Bank of Australia controls interest rates by using a system of interest rate setting that involves three levels of interest rates, all of which are set by the Reserve Bank and are based on an analysis of different economic conditions.
In fact, many investors have predicted that the Bank of Australia may use a system of targeting the markets in order to target the best possible interest rate and increase or decrease the interest rate when the situation warrants it. This is called “price targeting” and it can also be used by the Bank of Australia to determine where the price of the Australian Dollar is going, even if it is not in the best economic conditions and circumstances.