Sinking $A to lift petrol and travel bills

MARCH 12, 2015
News.com.au

PETROL, overseas holidays and televisions are set to become more expensive with the Australian dollar hitting its lowest level in almost six years.
THE Aussie fell to 75.61 US cents overnight, its lowest level since May 2009, and below its average price since being floated in 1983.
The most immediate impact is likely to be felt at the petrol pump, as the dollar’s fall is coinciding with predictions of a recovery in oil prices.
“You’ll see some pretty significant upward pressure on prices during the next few weeks if that were to occur,” Bank of America-Merrill Lynch economist Alex Joiner said.
“The Australian dollar declining, people will see that at the petrol pump immediately.”
Cars, electrical appliances and clothing are also likely to get more expensive, but not straight away, as importers tend to buy goods in bulk at a fixed price.
“A lot of retailers have hedging arrangements in place whether they last for three, six, occasionally 12 months, so the price increases are sort of factored in over time,” Mr Joiner said.
For travellers, a weaker dollar means more expensive overseas holidays, particularly in north America, though better value can be found in Europe and Japan, as the Australian dollar has been holding its value against the euro and the yen.
It’s also good for the Australian tourism market, as a weaker currency is likely to attract more overseas visitors.
The Aussie’s fall against the greenback has been fuelled by expectations of interest rate hikes in the US and the growing chance of more rate cuts by the Reserve Bank of Australia.
The Australian dollar could fall even further on Thursday if February’s unemployment rate proves worse than expected.
Credit Suisse this week forecast the Australian dollar will sink to 50 US cents in the coming years.