Australian dollar falls below S$1 for the first time since 2009

Australian dollar falls below S$1 for the first time since 2009

Hurt by slowing global demand for the country's commodities in recent months, the Australian dollar fell below the Singapore dollar for the first time since 2009 on Monday.

SINGAPORE: The Australian dollar dipped below the S$1.00 level on Monday morning (Jul 27), falling below parity against its Singapore counterpart for the first time since 2009.

Around 1.10pm Singapore time, the Australian dollar was trading at around 99.9 Singapore cents, compared with just above S$1.00 late Friday in Asia, according to Bloomberg data.

The Australian dollar has been hurt by slowing global demand for the country's commodities in recent months.

According to analysts, the Australian dollar will continue to weaken in the next two to three months, putting pressure on firms that compete against Australia in industries like tourism and education.

Against the Singapore dollar, the Australian dollar has fallen by around 8 per cent since the start of the year, taking it to below parity for the first time since 2009.

One market watcher said this makes Australia a more attractive place to visit, but on the other hand, it hurts Singapore businesses such as schools that compete for students from the region.

Mr Daryl Guppy, an independent analyst at OANDA, said: "For education, it means a student in Vietnam now will look at Australia because it is cheaper to go to Australia than it is to come to Singapore, for instance. That creates a competitive advantage for those currencies which are going down like the Australian dollar."

Looking ahead, analysts said the Australian dollar could lose another 5 to 6 per cent against the Singapore dollar over the next few months.

"Against the Singapore dollar, we may have not found a bottom,” said Mr Philip Wee, a senior currency economist at DBS.

“Bear in mind that the Singapore dollar is managed against a band that limits the US dollar's upside against Singapore’s, but there is no band against the Australian dollar. So against the Singapore dollar, I think we have to keep an open mind for the currency,” he added.

On Friday, the Australian dollar dropped to its weakest level in six years against the US dollar, as a gauge of Chinese manufacturing activity unexpectedly fell to the lowest level in 15 months. China is the biggest market for Australia's natural resources.

Singapore firms that derive a large part of their income from Australia include Singapore Telecommunications and Frasers Centrepoint.

Source: CNA/rw/xk

Bookmark