Aussie Dollar Plunges To $0.62 Suppliers Set To Be Hit Hard
The volatile global economic conditions have caused the Australian dollar to fall even further, with the value of the AUD declining to $0.6215 earlier this morning a move tipped to result in major price increases for appliances and consumer electronics.
Over the last 24 hours the A$ has fallen roughly 4%, before moderating to $0.6294 as of 12.00pm (as the chart below shows). Earlier this week the dollar was at $0.666.
Many distributors hedged the dollar at $0.67 pre 2020.
Although a low Australian dollar typically means that retailers have to raise their prices, there is a particularly difficult operating environment at the moment, with low consumer sentiment and the Australian public increasingly avoiding public places due to coronavirus.
Economists have told ChannelNews that they therefore expect that retailers will try to keep prices low in order to entice consumers.
“The drop in the AUD has definitely squeezed retail margins over the last year. Retail prices have risen, but they’ve not kept pace with the depreciation of the AUD,” Sarah Hunter, Chief Australia Economist at BIS Oxford Economics told ChannelNews.
“We might see some price rise from some retailers, but I don’t expect to see a general increase in prices given the environment retailers are currently operating in,” Hunter said.
Australia’s stock markets have also been wiped out, with the S&P/ASX Index falling by 6.5%, reaching 4923 around midday.
Driven by the mounting COVID-19 pandemic and its challenging economic impacts, economists have said these declines are likely to continue.