Dr Savvas Savouri, head of Toscafund hedge fund told The Australian that the Aussie dollar could hit $US1.70 in three years, contradicting many opinion that it will dip later this year.
Huge demand for Australia resources in China and a weak US Dollar has fuelled the dollar’s increase, keeping it on its record run.
While cheap imports and airfares have shoppers and consumers around the country heralding the strong dollar, local manufacturers are in woe: Australian manufacturing activities has contracted in April for the seventh month, having to face competition from cheaper imports and overseas customers getting their supply from cheaper sources.
The rising dollar also sparked talks from retail union to impose GST on all imports in a bid to revive local retail industry to its former glorious day. With increasing consumers flocking to international sites like Ebay for their purchases, retail sales in March recorded a surprise drop.
On a more positive note, the high dollar will most likely restrict Reserve Bank (RBA) to only one interest rate rise this year, easing household budget and mortgage repayment. The high dollar has also been buffering motorists against an even higher fuel costs, or else fuel price would’ve been 15 cents higher, according to Fueltrac General Manager, Geoff Trotter.