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Factors affecting supply and demand australian dollars

  • To the extent permitted by law, we exclude all liability for any loss or damage arising in any way;
  • Supply and Demand 1688 words - 7 pages low forcing the price to go up because of competition;
  • Reserve bank policies The Australian dollar has been quite popular for carry trades between itself and the Japanese Yen, for which the interest spread between the two has been as high as 4 percent;
  • The graph from OFX below shows the historical rate over the past five years;
  • Although employment is down nationally and the domestic workforce appears to be getting back to pre-GFC levels, the USD is still yet to see the strength it exhibited in years past;
  • The macroeconomic concepts also enable an understanding of the factors affecting the shifts in supply and demand on the equilibrium price and quantity.

What gives the United States Dollar its value? This means that the USD is held by other countries in significant amounts as part of their foreign exchange reserves, which is then used in international transactions, international investments and other critical transactions in the global economy.

Factors Affecting Supply And Demand Of Australian Dollars

In fact, several countries outside the USA use the USD as their official currency, given its prominence in global financial affairs, and many currencies are fixed to the US dollar. What can affect the value of the United States Dollar? Monetary Policy Monetary policy is generally described as the way the central bank of a country controls the supply of money to businesses and people, in order to manage economic factors such as growth and inflation.

Generally speaking, the lower the interest, the more likely people will borrow to spend money as the cost of credit is cheaper.

Factors impacting the Australian Dollar to US Dollar Exchange Rate

Monetary policy in the USA is controlled by the Federal Reserve, which controls the exchange rate through money supply, the buying and selling of government securities and the setting of interest rates. Although employment is down nationally and the domestic workforce appears to be getting back to pre-GFC levels, the USD is still yet to see the strength it exhibited in years past.

The Federal Reserve has stated that it expects inflation to continue to rise in 2018, and it is likely it will hike up interest rates as a result. This could aid in bolstering a recovering USD as the year goes on. With the federal government shutting down over ongoing funding issues earlier this year, the uncertainty is set to impact negatively on the USD. What does this mean for the Australian dollar to US dollar exchange rate?

The graph from OFX below shows the historical rate over the past five years: As uncertainty in the US economy continues to persist, the exchange rate may well continue in the favour of the AUD.

  • What Gives the Australian Dollar its value?
  • Demand is the amount of the product or service that buyers want to buy;
  • The prices and quantity supplied adjusted according to the factors affecting the supply and demand.

In addition to the relative strength of the two economies, factors that affect the Australian dollar to US dollar exchange rate may be based, in part, around demand for Australian commodities such as iron ore, coal and gold. Save money when converting your Australian dollars to US dollars.

What makes the Australian dollar move?

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Factors Affecting Movements in the Australian Dollar

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