AUSTRALIA dollar slumped to a six-month low on Friday, as investors took to social media to urge them to “buy” the currency, following the shooting at a gay nightclub in Orlando.
The Australian dollar traded at 66.99 US cents at 7:30am (AEST), the lowest since August 20, 2016.
In a sign of the currency’s resilience, it was the weakest since mid-July, and its best-ever performance since July 2, the day of the attack on the Pulse nightclub in downtown Orlando.
In recent weeks, the dollar has been losing ground against the Japanese yen.
The weak dollar has had a major impact on Australian exports, which have slumped by a fifth this year.
In June, Australia imported $9.8 billion worth of goods from China, the world’s second-biggest importer, which fell below the $11 billion benchmark it had reached in the second quarter of last year.
While the loss of manufacturing jobs has played a major role in the Australian economy, the sharp drop in exports has also had a significant impact on the dollar’s purchasing power.
“It’s pretty bleak for the dollar,” Australian Commodities and Markets Corporation (ACCOM) economist Andrew Gee said in a note.
“The Australian dollar has lost almost a quarter of its value since the end of last month.”
ACCOM data shows the Australian dollar lost more than 30 per cent of its purchasing power since July, and the most recent quarter it has lost more then 70 per cent.
“There is no easy way to say whether the shooting is a direct result of the ongoing weakness of the dollar and how it will impact Australian economic activity,” ACCOM said.
“However, the broader trend is that the Australian Government is trying to control the currency to reduce inflation and stoke investor demand for Australian exports.”
But the government has resisted pressure to do so.
It has said the government will maintain its current policies, and will not change them.
“We will remain firmly committed to our economic policy, and we will remain firm on the policy of keeping the Australian currency stable and resilient,” Treasury spokesman Paul Fletcher said.
Mr Fletcher said the Australian government’s policy remained unchanged, and had not been influenced by the recent shooting.
“Our policy is to support economic growth, which means keeping the price of our exports at or above their value,” he said.
Australia has been experiencing a mild slump in manufacturing activity.
But the weak dollar and strong Australian dollar have made it difficult for exporters to import goods from overseas, including in the key markets of Asia.
The weaker Australian dollar also has a significant effect on the value of the Australian pound, which has dropped by about 2.5 per cent against the dollar since August.
The pound is trading at about 80 US cents, compared with about 90 US cents when the shooting occurred.
Australia’s mining and energy industries have also been hit by a strong drop in export revenues.
The industry has suffered a major hit as it struggles to recoup its losses from mining and coal leases, and also from falling royalties on water.
“Australia has suffered from declining revenues from our industries in recent years,” ACCom chief economist Andrew Jones said.