That sinking feeling

Its not always fun to see something we teach in action. The last few days have seen the Australian dollar taking a serious depreciation hit. The following graph plots its slide since late July:

Aussie dollar graph

This has a big impact on the costs of imported goods for all of us (i.e. the 40″ LCD TV just got a whole lot more expensive), including manufacturers who use overseas inputs. It has also meant Australians haven’t reaped much of the benefit of falling oil prices (as oil is typically priced in $US).

Not everyone in the Australian economy suffers of course. This article highlights the big benefits to Australian farmers, and also the mining companies who sell their commodities in $US.

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