World gives Aussie dollar a walloping

[ejbr]

Source: Sydney Morning Herald

Scott Rochfort and Erik Jensen
October 27, 2008

GLOBAL financial markets have singled out the Australian dollar for special punishment. Over the weekend the local currency was subjected to its biggest sell-off since it was floated in 1983.

As the gloom darkens over the global economy, the frenzied sell-off on world sharemarkets has spread to currency markets, and the Australian dollar reached a five-year low of 60.57 cents against the US dollar and a record low against the Japanese yen.

The big fall in the Australian dollar prompted London's Financial Times to dub the currency the "whipping boy" of foreign exchange markets.

The dollar closed in US trade at US61.78 cents, down US4.5 cents on Friday night and 37 per cent from the high of US98.49 cents it reached three months ago.

The slump in the currency has confounded even the most seasoned of market commentators. The dollar has even been strongly outperformed by Iceland's hapless krona and Brazil's real over the weekend.


Read more: http://business.smh.com.au/business/world-gives-aussie-dollar-a-walloping-20081026-5910.html

[Turbineguy]

1. And they have a drought.

[dixiegrrrrl]

24. no no no..they have a dryness.

Headline:

Australia bans word 'drought' as too upsetting for farmers.

http://tinyurl.com/6rklgj

[BlueDonkey08]

2. Crikey, mate!

[pam4water]

3. I don't know why it drop so much. Australia didn't deregulate is banking system and

it has keep it's nation debt under control, unlike US. I read something about one of the top ten China Companies having a position on the Australia dollar and canceling. They fire the two executives that make the currency bet and then said Mulligan. Unless a lot of Chinese companies had positions I don't see how one company could do that much damage.

This is the article that I read, but it was the only one I could find. I hatez the googles. The one I read early had more details.
http://dealbook.blogs.nytimes.com/2008/10/21/company-in-china-loses-bets-on-currency/
http://www.bloomberg.com/apps/news?pid=20601081&sid=ah79vBF_gExE&refer=australia

[Darth_Kitten]

4. Why do they think they are special......

Canadian dollar has dropped, what, 20 cents over the last month?

Why are we being punished? :shrug:

[pam4water]

5. I think some of it is reflexive -- historically the dollar has been a safe heaven

so now that everything is uncertain people are going back to what they know, but I think they are going to have second thoughts when they look at the size of the US debt.

Also the USA takes in like 75% of Canada's exports? So I guess the USA is sucking Canada down with it.

What shape is the Canadian banking system in? And how big is the Canadian national debt. I think it is pretty large on a per cap basis.

<snip>
Australia governs with low debt
Figures released today by the OECD show Australian governments are burdened with the smallest financial liabilities of any country in the Western world.

The figures, included in the OECD's half-yearly Economic Outlook, show Australian state, federal and local governments have gross financial liabilities totaling just 16 per cent of GDP - one-fifth of the OECD average.

By contrast, the United States has liabilities - debts and other future obligations such as superannuation payouts - equivalent to 65 per cent of its GDP, while Italy's liabilities amount to 117 per cent of its GDP and Japan's to a massive 169 per cent.

In net terms, subtracting the financial assets of government superannuation and investment bodies, the liabilities of Australian governments amount to just 1 per cent of GDP, behind only Norway, Korea and Finland.

Australia was one of just 10 OECD countries whose governments are running surpluses, while the other 20 are in deficit, by as much as 8.4 per cent of GDP in the Czech Republic, the OECD estimates.
<snip>
http://www.theage.com.au/articles/2004/05/11/1084041400561.html?from=storylhs


Also the drop in the Australia currency was really sharp, not gradual like the rest. I think there is something else up.

[WriteDown]

6. Australian real estate....

is suffering an identical crisis to the US. Real estate values are just as inflated.

[ohio2007]

10. Chinese firms buy up huge tracks of Australian real estate for mining operations

still can't find the link

[Nambe]

11. Foreigners can own no more than 49% of business or property in Aussie.

[pam4water]

16. I don't know. I know that is true for China and India. It would be old if it were true for Australia

[pam4water]

20. They are still in better shape than the US....

We got the housing bubble, incredible national debt and non-existent bank/insurance regulation and incompetent people in charge. What more do you want?

[WriteDown]

22. A strengthening US dollar and a weakening....

Australian dollar? Now all I need is for the Euro to seriously drop.

[pink-o]

23. I'm with ya! Hate to be selfish, but maybe I should go back to Sydney this February...?

[CHIMO]

17. Canadian banks ranked soundest in the world

Canada has the world's soundest banking system, closely followed by Sweden, Luxembourg and Australia, a survey by the World Economic Forum has found as a financial crisis and bank failures shake world markets.

The World Economic Forum's Global Competitiveness Report based its findings on opinions of executives and assigned banks a score between 1.0 (insolvent and possibly requiring a government bailout) and 7.0 (healthy, with sound balance sheets).

http://www.cbc.ca/money/story/2008/10/09/wef-canada-banks-rating.html?ref=rss

Federal debt on a per capita base: $19,574
Do the math yourself.

Federal government net financial debt
http://www40.statcan.ca/l01/cst01/govt03a.htm

Population and dwelling counts, for Canada, provinces and territories, 2006 and 2001 censuses - 100% data
http://www12.statcan.ca/english/census06/data/popdwell/Table.cfm?T=101

But don't let anyone know yet. Keep it a secret so that the loonie can drop some more.

[pam4water]

18. Why would you want it to drop some more?

[CHIMO]

19. So

That I can make more money when the shorts have to cover.

[pam4water]

21. OH

:o I'm glade I did not go with my impulse to move USA dollars to Australian back in July. I got to say the 7% interest look inviting.

[WriteDown]

7. I've been wanting to buy...

a kangaroo leather whip. This may be the time.

[Shipwack]

8. Why would you want to whip a kangraroo?

:shrug:

[WriteDown]

12. Haha...

Their hide makes an excellent leather, but I'm not sure I could whip one. They are tough animals.

[pam4water]

13. I assume he is joke... Right?

[ohio2007]

15. lol. Humor....it's not for everybody to understand

:toast:

[ohio2007]

9. Does this mean products made in Oz will be gobbled up around the Pacific rim at bargain prices

or will the trade balance be ignored by the Chinese who do not float their currency out of fear ?

[Democat]

14. John Howard the Bush ass kisser screws his people!

How's the Bush ass kissing working out for you now, Howard?