September 21, 2014 - Falling Australian dollar will benefit domestic tourism and property
Sydney Morning Herald | by David Potts
The 5 per cent drop in the dollar in a fortnight will boost property prices and improve job prospects.
It also vindicates the Reserve Bank’s reluctance to cut rates despite sub par economic growth.
The dollar is “just playing catch down to commodity prices,” CommSec chief economist Craig James says.
An increase in vacancies suggests the worst of the job losses from the unwinding mining investment boom is over, while a survey by CBA, the biggest bank, of sales recorded through its eftpos terminals to be released on Monday shows consumer demand is picking up.
Domestic tourism will be the biggest winner from the dollar’s fall and the extra spending will flow to other industries.
In 18 months it has slumped 15 per cent against the US dollar and euro and 20 per cent against the pound.
As the economy picks up momentum the weaker dollar will lift import prices such as cars, electronics and books as well as the cost of overseas holidays.
The impact on petrol prices will be more muted because of the separate fall in oil prices due tothe US ramping up production from fracking.
But it would boost the profits of about 30 per cent of listed stocks because of their foreign earnings.
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