The Australian Exchange Rate :: essays research papers fc

The Australian Exchange charge per unitIntroduction What factors affect the necessary and supply of Australian sawhorses in the foreign permutation markets? Distinguish amid the possible causes and effects of currency depreciation and a currency cargo deck on the Australian economy. What forces have come into play, if any, in the past quad months that have affected the value of the Australian buck?Exchange Rate The rate at which one unit of domestic currency is exchange for a given amount of foreign currency A outline HISTORY OF THE AUSTRALIAN DOLLARUntil 1971, the Australian dollar (AUD) was pegged to the British pound. This meant that the AUD blush or fell in line with the pound. In 1971, the AUD became pegged to the US dollar instead. These currencies were fixed currencies, which meant that the Australian currency would only change value when a major world currency also changed. This system lasted only until 1974 when the AUD became pegged to a trade-weighted cream of other currencies. This was still a fixed currency. In 1976 this selection of currencies became moveable. Small shifts were able to take place when needed. In 1983 the AUD became a aimless currency. This means that the value of the dollar is determined by supply and have. Initially, the reliever Bank of Australia was not intended to intervene in the market in time since then it has been deemed necessary for intervention to take place, usually to prop up the price. FACTORS AFFECTING SUPPLY AND DEMAND OF AUSTRALIAN DOLLARSWith a floating exchange rate, such as Australias, supply and demand factors largely determine the dollars equilibrium price. The exchange rate is sensitive to changes in some(prenominal) demand and supply, which can cause changes in the equilibrium exchange rate. some other factor, which can affect the supply and demand of Australian dollars, is intervention in the market by the Reserve Bank of Australia. DEMANDThe demand for Australias currency in the foreign exchange market (Forex) is a derived demand. It is derived from the demand for a countrys exports of goods and services and its assets. In simple terms, slew who may have a demand for the Australian dollar could admit _ Foreigners wanting to purchase Australian exports _ International tourists visiting Australia _ International investors wish to purchase Australian shares or property _ International firms setting up branches or expanding in Australia _ Speculators and investors who think the value of the Australian dollar pass on rise in hope of making a profit.