Australian dollar tumbles to fresh decade low

Australian dollar tumbles to fresh decade low

The Australian dollar fell to a fresh decade-low this morning as the deadly coronavirus and its ensued lockdown in parts of China stifles trading supply chains.

The local currency relies on exporting commodities to the world’s second largest economy but last week’s widespread ban on Chinese nationals travelling abroad is weighing on economic growth conditions.

The dollar was worth as little as 66.60 US cents this morning, which is its lowest point since March 2009, though it has moved slightly higher through the afternoon’s trading.

“The Aussie is absorbing a lot of bad news from its number one trading partner,” Westpac senior currency strategist Sean Callow told

“There’s been a very steep fall in Australia’s key commodity prices since mid-January, which was the peak of our export prices.”

Trading with China had allowed the Australian dollar to limit dramatic losses in the face of three rate cuts from the Reserve Bank of Australia last year as well as the country’s slowing economy.

But Mr Callow said there was now “a lot of concern” over China’s demand for industrial products as well as the impact on supply lanes and trade in general.

“The ripple effect is huge on the commodity side and obviously there’s a grave threat to Australia’s service exports from the travel restrictions on Chinese nationals,” he said.

“I was surprised the Aussie held up as well as it did early last week but it’s starting to see a bit more downside now.”

Reserve Bank governor Philip Lowe last week softened on his approach to continue reducing the rate below its current record level of 0.75 per cent.

But the market indicates a cut in May is 50 per cent likely and is fully priced to be reduced by August, which Mr Callow says will lead to the Aussie dollar being as weak as 65 US cents.

He had forecast the dollar to fall to 66 cents by the middle of the year but says this will need to be assessed.


Australian shares were below the 7000 points level at noon as continuing global concerns about the coronavirus outbreak caused falls in most sectors.

The S&P/ASX200 was down 0.48 per cent at 6988.8 at noon as mining and energy stocks weighed the benchmark index down.

The broader All Ordinaries index fell 0.54 per cent to 7083.1.

There were falls in most sectors, with only property trusts, telcos and consumer discretionary stocks marginally higher at noon.

Mining heavyweights BHP Billiton, Rio Tinto, Fortescue Metals, and oil and gas giants Woodside and Santos were down amid lower oil and some commodities prices.

The big four banks were also lower but gold stocks and supermarkets giants were in the green.

Woolworths was up 17.5 cents at $42.895 and Coles added 11 cents to $17.01. Aurizon shares also climbed — up 12.5 cents, or 2.35 per cent, to $5.455 — after the rail freight operator boosted its dividend by 20 per cent following a strong half-year.

The US and European markets fell slightly before they closed for the week on the back of renewed concerns about the fast-spreading coronavirus, which has killed more than 900 people in mainland China.

St George Economics says a strong US payrolls report offered only a brief break from virus concerns for markets.

“The death toll from the coronavirus has now exceeded that of SARS,” it said in a research note.

— with AAP

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