Newspaper- SMH.com.au
March 22 2011
The consistency of the Australian dollar against the Japanese Yen means that the global financial market was stabilising after the Japanese earthquake 10 days earlier and the Libyan conflict. The Australian dollar was trading at ¥81.39 yesterday (Monday 21st March), up from ¥77.33 on Thursday.
Global investors have been buying the English Sterling and European Euro on the expectation that the Bank of England (England's equivalent to the RBA) and the European Central Bank would raise rates. This means that investors have been staying away from the US Greenback, due to speculation that the US Federal Reserve would be the last out of all major currencies to rise, which has helped the Australian dollar in the past as it has stayed near parity to the US dollar throughout the last few months.
The VIX Index in America traded above 30 last week when it usually averages about 15-20, another sign that world markets are beginning to strengthen, which means that the Australian dollar will again gain ground of the US dollar- having reached parity today for the first time in a week.
In Commerce we have learnt about how foreign exchange rates affect the Australian dollar, and how other currencies can appreciate and depreciate against the Australian dollar. In recent times the Australian dollar has depreciated against the US Dollar due to global instability but today it has appreciated back to parity. The Australian dollar also has appreciated against the Yen, trading at 1 AUD= 81.39 YEN.
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