Why the dollar is defying commodities

How has the Australian dollar's strength defied falling commodity prices and declining terms of trade? The explanation, which has important rates implications, lies in changing funding of the current account deficit.

image

Iron ore and coal are widely recognised as Australia’s primary exports, and the surge in Chinese growth and infrastructure investment over the past decade has seen the demand and subsequent price of these commodities rise dramatically. This trend has pushed Australia’s terms of trade to record levels, and we have seen a commensurate rise in the value of the Australian dollar.

{{content.question}}

{{ twilioFailed ? 'SMS Code Failed to Send…' : 'SMS Code Sent…' }}

Hi {{ user.FirstName }}

Looks like you've already taken a free trial

Please enter your payment details

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to activate your membership

We cannot send you a code via SMS to {{user.DayPhone}}

If you didn't receive SMS code please

SMS code cannot be sent due to: {{ twilioStatus }}

Please select one of the options below:

Looks you are already a member. Please enter your password to proceed

Please untick this box when using a public or shared device


Verify your mobile number to unlock a FREE trial

Please sign up for full access

Updating information

Please wait ...

  • Mastercard
  • Visa
Mastercard

The email address you entered is registered with InvestSMART.

Please login or select "Don't know password"

Please untick this box when using a public or shared device


Register as a new member

(using a different email)

Related Articles