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- Slide: 1
- Oh no! Everything from overseas is so expensive now.
- Imported
- USD Price
- USD Price
- When the Australian dollar depreciates, imported goods become more expensive. This leads to higher prices for everyday products, increasing the cost of living. Inflation in Australia peaked at 6.1% in May 2022 and eased to 2.4% by December 2024, partly due to currency and rate adjustments. On the other hand, when the dollar appreciates, businesses that rely on overseas supplies (like electronics, clothing, or raw materials) save money on costs. This can lead to higher profit margins or lower prices for consumers.
- Slide: 2
- A depreciation of the Australian dollar boosts exports. Aussie farmers can sell their products at more competitive prices, attracting foreign buyers and increasing sales for their goods. Between January and March 2024, the AUD dropped from 0.67 to 0.63 USD, making Australian exports cheaper globally. However, an appreciation make this more costly for importers, meaning a drop in sales.
- A weaker dollar means my corn is cheaper overseas - more sales for me! But a stronger dollar means its more expensive overseas.
- Slide: 3
- When the Aussie dollar rises in value (appreciates), the government and the Reserve Bank of Australia (RBA) find it easier to keep prices stable because overseas goods become cheaper. But it can also hurt Australian exporters, slowing down the economy. When the dollar drops in value (depreciates), it helps Aussie businesses sell more overseas and boosts tourism. However, it also makes imports more expensive, which can lead to rising prices. The RBA then may need to raise interest rates to keep inflation under control. Sudden changes in the dollar mean the government and RBA have to act carefully to keep the economy balanced.
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