I have been amazed at all the recent media attention about the value of the Australian dollar relative to the US dollar. The Australian dollar is currently the fifth most traded currency. Newspapers and currency strategists are running polls in an attempt to predict whether the Australian dollar will be higher or lower than the US dollar by year end. There are clear concerns in some business sectors about the high rate of the Aussie and deals to be made by currency speculators. That said, it is sometimes wise to look back at history. Back in 1901 one Australian dollar bought $2.4 US dollars, and for most of the last century our dollar was above parity with the US dollar. History might well come to agree that the sub-parity period of the 1980s was an aberration for the Australian dollar and that the improvements in the fundamentals of the Australian economy might suggest that our dollar is going to be trading above parity against the US dollar for the foreseeable future. Business should take this view into their business planning and not assume that our dollar will fall back significantly against the US dollar.
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