The Australian dollar in the recent times has witnessed strong, which has been able to improve the condition of economy of the nation. In the recent times the US dollar has to undergo weakened its value due, which has given the opportunity for the Australian dollar to increase its value. The overall revenue that is generated by Australian government due to the high value of the Australian dollar has helped to improve upon the GDP of the nation (Dobson and Hooper 2015).
The purpose of the current report is to provide a detail description of the background situation that has lead to rise of the value for the Australian dollar. The report also provides detail description of the impact on certain group of people including the government and various stakeholders. The report also helps to provide with the hypothesis that helps to derive the research questions. All the ethical issues that are associated with the given scenario are being discussed.
The Australian dollar is the currency of Commonwealth Australia. In the year 2016 the value of Australian Dollar was calculated to be 5th largest in the world that is used as one of the major trading currency. The Australian Dollar accounted for 6.9% of the world’s total daily share (Apergis 2014). In the foreign trade exchange, market the Australian Dollar has a significant position along with US dollar and Euro and Yen. One of the major reasons for high value of Australian currency is due to the fact that the government has imposed high interest values that are imposed within the foreign exchange market. The higher rate of diversity within the economic system of Australia and also the political system has helped to improve upon the current value of Australian dollar (Warnock et al. 2017).
According to the report of Cole and Nightingale (2016), with the help of strong value of the currency it is possible for the consumers to import foreign goods at much cheaper rate. It is also possible for the Australian business companies to gain strong competitive advantage in the global market due to the fact that they are able to sell goods at much cheaper rates.
Hambur et al. (2015), have mentioned in the context that recent fall of the value of the US dollars is beloved to be one of the major contributing factors for the rise of the value for Australian currency. Recent rise of the value of Australian currency can also be a positive indicator for the people of Australia, who are moving abroad as they are able to afford the living cost in foreign countries at much cheaper rate.
The main purpose of the study is to decide upon the impact and the cause of the rise of the value for the Australian dollar. The study will aim to focus on the impact on the particular group of people including the consumers, employers, business owners and the government. The study will also aim to highlight upon the effects on the business that will occur in the near future due to the high value of Australian dollar.
The impact of the rise of the Australian dollar value across various industries will also be highlighted in the following section that will help to understand its impact on the overall economy of the nation.
The fluctuation within the interest rate of the currency has direct impact on several factors that can contribute both negative and positively to the economy of the nation. Due to the increased value of Australian currency then, the cost of importing products will increase. Hence, it is possible for the Australian business to gain competitive advantage in the global environment, which can ultimately help to improve the economy of the nation. It is therefore evident that the Australian consumer will have to pay more prices to buy the imported goods. On the other hand, as the competitiveness of Australian product is increased the customers are able to purchase goods at lower price that are being exported from other countries (Kim 2015). Hence, there is both positive and negative impact on consumers due to the increase of value of Australian dollar.
The value for Australian Dollar has increased significantly has resulted in various business organizations decreasing the total number of working staffs. Hence, the employees in various organizations face the issue of unemployment. The employer also gets affected due to the fact that they have to reduce the spending on human resource within the organization.
Rise of the value of Australian Dollar has direct impact on all the major government policies that are being implemented for business and financial matters (Hambur et al. 2015). Government also has to act swiftly in order to deal with changing value of the foreign capital and also the foreign exchange rate that will ultimately help to increase the flow of foreign cash. The taxation policies of the nation also have to undergo several changes due to the fact that the pricing of various consumer products have undergone huge changes. The economic policy of the nation also has to undergo huge change that can help to deal with the issues caused due to unemployment (Haque et al. 2015).
On hospitality industry: In case of the hospitality industry, the raise of the Australian dollar has a great impact. The higher exchange rates reduce the economy; as a result, the number of the customers of the hospitality industry becomes reduced. The value rate of the currency decreases gradually. The market size of Australian hospitality industry is large that is badly affected as the target customers has to pay more for a particular package (Lim, Nguyen and Chua 2014). Hence, the rate of the loss of the hospitality industry is high.
On retail industry: the increase rate of the Australian dollars increases the value impact of the retailers. The buying power of the retail industry increasing as the import becomes less expensive. On the other hand, t he export become expensive and the consumers get the benefits due to the lower price of imports (Robinson, Nguyen and Wang 2017). However, the interest rates falls due to the pressure of lower price on the inflation.
On baking industry: The dollar value has a huge impact on the economy. The residential companies earn more profit in comparison to the foreign companies. In such case, the rate of interest increase and the curve of the economy rise up. However, the banking sectors face both the positive as well as negative impacts (Dobson and Hooper 2015). The increase rate of the dollars is the sign of the increase of economy and it is profitable for the country.
On tourism industry: the tourism industry is badly affected due to the high rate of the Australian dollars. The visitors have to spend much on the tourism, which can reduce the number of the tourists and the industry can face loss. Warnock et al. (2017) mentioned that Australian is famous for their tourist spots and the GDP is for the particular industry. Hence, the GDP rate of Australia has the threat of reduction.
As the residential companies of the retail industry get the benefits, it is good for the country. The number of the customers increases. On the other hand, the import cost reduces, which helps the retail vendors to reduce the cost. The buying power increases. The consumers get benefits. However, the foreign vendors face challenges and this can affect the economy of the country as the foreign industries are facing loss in Australia for the increase rate of the Australian dollar. As mentioned by Forsyth et al. (2014), the corporate earnings got disappointed due to the high rate of the Australian dollars as the amount of profit decreases.
The banking industry has both the positive and negative effects. The rate of interest increase. On the other hand, as the maturity period is longer, consumers do not agree to invest in the banking or to take the loaning help (Dobson and Hooper 2015). However, the banking sector is trying to maintain the interest rate and help their consumers about the loan system. The effect of the assets is managed from the accounting stand point. The banking sector is trying to improve the policies to reduce the fear of loss.
For the retail sector:
For the retail sector:
Hypothesis 1: Increase rate of dollar have a positive effect on the employees of retail sector
Hypothesis 2: Increase rate of dollar have both the positive and negative effect on the overall banking industry
Hypothesis 3: Strategies can help to develop the impact of increase rate of dollar on the banking sector
For the banking sector:
Hypothesis 1: Increase rate of dollar have a positive effect on the stakeholders of retail sector
Hypothesis 2: Increase rate of dollar have both the positive and negative effect on the overall banking industry
Hypothesis 3: Action plan can help to develop the impact of increase rate of dollar on the banking sector
For the retail sector:
It is important for the researchers to focus on the ethical issues that can help you to ensure that all the data are being collected from genuine sources. It will also help to ensure that the result of the research work can be referred in the future in order to deal with similar issues. The data protection act (1998) needs to be maintained so that the researcher does not face any challenges. The data, which are collected from the secondary resources, like books, journals, articles, and websites need to be protected.
Conclusion
Based on the above discussion, it can be said that the increase value of the Australian dollar has a great influence on the economy of Australia. Some of the business sectors are facing negative impact, some are facing positive and some are facing both the positive and negative impact. In the recent times the US dollar has to undergo weakened its value due, which has given the opportunity for the Australian dollar to increase its value. The residential companies earn more profit in comparison to the foreign companies. The overall revenue that is generated by Australian government due to the high value of the Australian dollar has helped to improve upon the GDP of the nation. The effect of the assets is managed from the accounting stand point. The market size of Australian hospitality industry is large that is badly affected as the target customers has to pay more for a particular package.
The government needs to strict their rules and regulations to improve the situations. The foreign companies also need to get some benefits and needs to be attracted so that they can invest in the development of the country. The banks can maintain the interest rates so that the consumers can take the help of loaning from banks. With the import system, the export systems also need to be improved. The tourists need to be attracted as most of the economy depends on the tourism and hospitality industry. It can be expected that the condition of Australia will develop.
References
Apergis, N., 2014. Can gold prices forecast the Australian dollar movements?. International Review of Economics & Finance, 29, pp.75-82.
Cole, D. and Nightingale, S., 2016. Sensitivity of Australian trade to the exchange rate. Reserve Bank of Australia Bulletin, pp.13-20.
Dobson, C. and Hooper, K., 2015. Insights from the Australian Tourism Industry. RBA Bulletin, March, pp.21-31.
Forsyth, P., Dwyer, L., Spurr, R. and Pham, T., 2014. The impacts of Australia’s departure tax: Tourism versus the economy?. Tourism Management, 40, pp.126-136.
Hambur, J., Cockerell, L., Potter, C., Smith, P. and Wright, M., 2015. Modelling the Australian Dollar (No. rdp2015-12). Reserve Bank of Australia.
Haque, M.A., Topal, E. and Lilford, E., 2015. Relationship between the gold price and the Australian dollar-US dollar exchange rate. Mineral Economics, 28(1-2), pp.65-78.
Kim, S.J., 2015. Australian dollar carry trades: time varying probabilities and determinants. International Review of Financial Analysis, 40, pp.64-75.
Lim, G.C., Nguyen, V.H. and Chua, C.L., 2014. Review of the Australian Economy 2013–14: The Age of Austerity?. Australian Economic Review, 47(1), pp.1-12.
Robinson, T., Nguyen, V.H. and Wang, J., 2017. The Australian Economy in 2016–17: Looking Beyond the Apartment Construction Boom. Australian Economic Review, 50(1), pp.5-20.
Warnock, F.E., Warnock, F.E., Warnock, F.E. and Warnock, F.E., 2017. Prospective Capital Flows and Currency Movements: US Dollar versus Euro. Darden Business Publishing Cases, pp.1-23.
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