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Oz $ losing so much value to the Baht


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On 9/25/2024 at 1:25 AM, chiang mai said:

An interesting piece below on the implications for Australia's economy as a result of Chinese policy changes. The bottom line is that exports to China have peaked and are in decline, this will manifest itself in the exchange rate, unless Australia can find new markets for its commodities, which seems improbable, given its remote location.

 

"For Australia, it does not take Albert Einstein to work out the implications. China is already using less coal, gas and iron ore. Even less is ahead.

Steel and iron have been falling for years already and they are not even halfway down yet. This affects the economy in three ways over time.

First, budget receipts are hit, spending is cut, or taxes rise. Second, falling prices force miners to curtail investment. Third, equity prices fall, which has begun but has far still to run.

 

These three impacts comprise a giant national income shock that wipes out wage growth and inflation. The Reserve Bank of Australia will be forced to cut the cash rate much deeper than anybody expects through the next few years".

 

https://au.finance.yahoo.com/news/chinas-interest-rate-move-leaves-australia-exposed-future-is-grim-200035137.html

The outlook for the Aussie is not that good, but the currency is still backed with tangible assets like resources and agricultural products, not by some hot air like a "service economy".

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