Dollar dip suits lamb exporters
WOOL, lamb, citrus and nuts should benefit from the falling Australian dollar.
And while the dollar has bounced back against the US currency after volatile trading last week, it’s expected to continue to bounce around before falling further.
Rabobank’s head of financial markets research Asia-Pacific, Michael Every, said the volatility experienced by the Australian dollar in one day last week was more than expected in an average year.
Last Thursday the Australian dollar briefly dropped more than 3 per cent to US67.49 cents — its lowest level since early 2009 — and then by mid-afternoon it had recovered to US69.37 cents.
By Monday the currency had risen to US71.3 cents — about 9 per cent below the US78.40 cents it was trading at 12 months ago.
Mr Every said the dollar would continue to “bounce around” and expected it would drop back to about US68c.
“It is still too high and there’s a lot of things going on in a lot of places,” he said.
Rural Bank senior analyst Matt Ough said the market remained volatile and uncertain given the tense state of trade negotiations.
“The Australian dollar could trend lower over the next six months as global issues such as Brexit and the USChina relationship add risk to currency markets,” Mr Ough said.
He expected wool, lamb, citrus and nuts to benefit the most from a low dollar this year due to current strong export demand and adequate supply to meet the demand.
“A lower dollar doesn’t automatically mean more money for all Australian agricultural exports. It needs to be coupled with growing demand and adequate supply to maximise the advantage.”