Falling dollar hurts Australians travelling abroad
TRAVELLERS heading overseas this Christmas are carrying an Aussie dollar at its lowest December levels in seven years.
Economists expect the currency weakness to continue in the year ahead, but the financial pain felt by some holidaymakers has translated into Christmas joy to local tourism operators and other sectors.
Our dollar last had a Christmas near US70c in 2008, during the depths of the Global Financial Crisis, and is being crunched by huge falls in global commodity prices and US dollar strength as the Americans raise interest rates.
It has also fallen sharply against the British pound and New Zealand dollar in recent years, but has held up against the euro and Japanese yen.
New Zealand, Indonesia, Britain and the US are Australians’ top four overseas tourist destinations.
CommSec chief economist Craig James said data showed sales at Australian hotels and motels had increased 20 per cent in the past year, while low petrol prices also encouraged people to holiday at home.
Tourism & Transport Forum chief executive Margy Osmond said the falling dollar – currently worth US72c – was “fantastic news for our tourism industry”.
“A lower dollar makes Australia a more attractive destination for international visitors looking for value for money on their holidays and it encourages more Australians to holiday in their own backyard as the cost of overseas travel rises,” she said.
“The Australian tourism sector is set to have a bumper 2016. The fall in the Aussie dollar takes up to 12 months to have an impact on the number of international visitors to Australia – so we will definitely start to see a surge in numbers as a result of the fall of the dollar through 2016.”
Mr James said CommSec expected the dollar to weaken further next year.
“When you consider how much commodity prices have fallen, the Australian dollar should be a bit lower than it is at the moment,” he said.
“We don’t expect it to be falling away to the low-60s but we are not expecting the Aussie to appreciate much.”
The dollar remains well above its 2001 lows of US47c, but is well down on its 2011 highs near $US1.10.
Apart from travellers heading offshore, shoppers are traditional losers when the dollar drops and import prices rise, but economists have not noticed that trend this time around amid intense competition among retailers.
BetaShares chief economist David Bassanese said the dollar had slumped mainly because commodity prices had fallen 70 per cent in the past four years, and further dollar downside was likely amid slowing demand and rising supply for commodities.
“All trade-exposed sectors should benefit from the Australian dollar’s weakness as it makes exports cheaper in overseas markets,” he said.