The Australian dollar: Still overvalued?

Two years in investing, especially in turbulent times such as these, can feel longer. In October of 2010, I published this Doddsville article asking whether the Australian dollar was overvalued.  Back then I said that, although the dollar was historically high, this was no bubble; higher commodity prices meant that the dollar was behaving exactly as it should. Today, however, the commodity boom is over. Prices for just about all resources have fallen heavily, none more so than coal and iron ore, Australia’s two largest exports. If high commodity prices caused the dollar to soar, lower prices should prompt a fall,...

Two years in investing, especially in turbulent times such as these, can feel longer. In October of 2010, I published this Doddsville article asking whether the Australian dollar was overvalued.  Back then I said that, although the dollar was historically high, this was no bubble; higher commodity prices meant that the dollar was behaving exactly as it should.

Today, however, the commodity boom is over. Prices for just about all resources have fallen heavily, none more so than coal and iron ore, Australia’s two largest exports.

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