Exchanging Australian Dollars

How is the AUD affected by Chinese monetary policy?

The Australian Dollar has weakened during the course of last week as the Chinese central bank has continued to weaken the Chinese Yuan. As Australia’s biggest trading partner the weakening of the Yuan has meant it is more expensive to buy Australian exports which has led to less money flowing in to the economy down under and hence a drop in the Australian Dollar exchange rate.

The reason for the devaluation of the Yuan was owing to the Chinese economic slowdown. Official reports are that Chinese GDP is 7% and the weakening is an attempt to stimulate an export-led recovery for the world’s second largest economy.

The RBA announce their own minutes tonight from this month’s meeting and this could give us an insight as to when they may think about an interest rate cut down under. I think it is inevitable that the RBA will have to cut interest rates over the next few months as the economy is having problems and with China slowing down I think they will be left with little choice but to cut rates in the future.

Thank you for reading my AUD Forecast. If you have a need to sell or buy Australian Dollars you can contact me directly at teh@currencies.co.uk.


Read more articles
Exchange rates on this page are interbank rates and indicate where the market is trading to show the performance of a currency pair. They are not indicative of the rates which we offer. The information on this web site is provided free of charge for information purposes only. It does not constitute advice to any person on any matter. Foreign Currency Direct plc. ("FCD") makes every reasonable effort to ensure that this information is accurate and complete but assumes no responsibility for and gives no warranty with regard to the same.