Recently, the Australian dollar to Renminbi exchange rate has been continuously falling.

 

 

Since February 2st, the Australian dollar has continued to decline for six days in a row. By February 28th, the Australian dollar to Renminbi fell by 12% over the past week.

 

 

Currently, the Australian dollar exchange rate is gradually recovering to 4.5953.

 

 

 

 

What exactly caused the Australian to fall? Will the Australian dollar continue to fall?

 

 

 

 

Why did the Australian dollar fall?

 

 

1. Weakness in Australia's economy

 

 

The domestic economy of Australia faces pressures, with GDP growing only 0.3% quarter-on-quarter in the fourth quarter of 2024, and per capita GDP continuing negative growth, economic momentum, sluggish consumer market, and declining corporate investment.

 

 

In addition, Australia is an important supplier of global commodities, with its economy highly dependent on iron ore, and other commodity exports. The slowdown in global demand (especially China's import growth slowing down) has led to price declines, directly dragging down the Australian dollar.

 

 

 

 

the weak domestic economy combined with the slowdown in global commodity demand has led to expectations of interest rate cuts by the Reserve Bank of Australia, which in turn suppress the Australian dollar exchange rate. At the same time, there is a lack of confidence in the future prospects of the Australian economy, leading to a weakening of the fundamental for the Australian dollar's appreciation due to multiple factors.

 

 

2. Impact of US policies

 

 

 

From the Federal Reserve's monetary policy to the global trade landscape and geopolitical turbulence by the United States, the Australian dollar is affected in all aspects by the United States.

 

 

Recently, hawkish statements from Fed officials have strengthened the US dollar, furtherating downward pressure on the Australian dollar. If the Fed delays cutting interest rates, the Australian dollar may continue to be under pressure because the interest rate differential will make the dollar more attractive.

 

 

At the same time, US President Trump announced that he would impose tariffs of 25% and 10%, respectively, on imports of from Mexico, Canada, and China starting March 4, sparking concerns about the contraction of global trade.

 

 

When international trade tensions are high, the US dollar, as safe-haven currency during special periods, global investors often sell off the Australian dollar, strengthening the US dollar and causing the Australian dollar to fall.

 

 

 

 

 

 

Future trend of the Australian dollar

 

Australian Dollar Future TrendFrom a global perspective, the weakness of the Australian dollar reflects investors' concerns about the overall economic outlook of Australia.

 

 

Currently, the four major banks in Australia predict that may be 2-3 more interest rate cuts within 2025, which may further reduce the attractiveness of the Australian dollar.

 

 

In the future, the of the Australian dollar will depend on the progress of trade wars, the response measures of Asian countries, and adjustments in the monetary policy of the Reserve Bank of Australia.

 

 

 

the short term, risk aversion sentiment and trade uncertainty may continue to suppress the Australian dollar.

 

 

 

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