the dollar going under parity - again

[h0ughy]

better buy up now - it might be a while before it goes back over the hurdle again, so much i want and so little money to get it with:rofl:

[johnt]

Well, I guess it's a bit of a balance. Those of us with a mortgage now have a bit more spare cash, only to pay it back some other way due to the drop in the dollar. (oh and that Medicare levy increase coming up!). Yes, that famous comment "so much i want and so little money to get it with" must be one of the most universally applicable statements, as it must be scalable to any level of income.
:cloudy:

[bojan]

Strong AU dollar was (and still is) a disaster for our manufacturing industry.. we should all be very aware of this.

[Stardrifter_WA]

Fortunately, some of us don't have a mortgage and back when I did, I was paying over 12%, but admittedly, on a lower amount of borrowing than most people have today. :sadeyes:

Unfortunately, for self funded retirees, the interest rate drop is hurting them, badly.:mad2:

Not much point in having money in the bank any more, which is why I am off to the states in July for 6 weeks (is it July yet:question: :D). Fortunately, I took a punt that the exchange rates would drop, so bought lots of US dollars. The very next day, they started dropping, so I was lucky.......for a change. Actually, luck had nothing to do with it really, it was an educated guess at the direction it was going. Just lucky I did when I did. :)

Cheers Peter

[Stardrifter_WA]

Unfortunately Bojan, our dollar is going to stay relatively high, long term. But, if it does fall, it won't all be good, as we will be paying a lot higher fuel prices (aren't we paying enough now?) and the subsequent rises for utilities, freight etc. Farmers are already complaining about high fuel prices, so whilst gaining in one area, they face losses in another area.; and fuel is a high input in farming.

I just hope we don't see the lows the dollar has previously been at. As for manufacturing, it is pretty much doomed anyway, as we just cannot compete on wages. Cost of wages appears to be the greatest problem business faces today anyway, and that ain't gonna change any time soon.

Whilst Australia is powering along, not everyone is benefiting. In some sectors that I deal with, it is looking grim. However, it could be worse!

That's life!

Somebody once said, "despite the cost of living, have you noticed how living remains so popular."

Cheers Peter

[johnt]

I guess one quickly realises that each persons situation is different, so a few simple & innocent statement can lead to quite a complicated and perhaps serious discussion with greatly different opinions, many dimensions, and situations depending on where each person is in their life etc. etc. I guess all these dimensions tend to balance each other out over the long term, but most people tend to look at their own situation over the short term. Getting too hot a topic for me, I'm out.
:rundog:

[gregbradley]

Currencies tend to trend strongly. Also there must be tons of traders with stop losses just under a dollar. So I expect it will go down for some time.

High interest rates compared to the rest of the world was a big reason it was up. So was the massive mining investment which has plateaued out.

Perhaps the dollar honeymoon is over. It will probably bounce back at some point but perhaps the days of it being over $1? I guess it depends on how the USA is doing. They actually had a tax surplus last month!

Greg.

[Stardrifter_WA]

I didn't think it was a hot topic. One would have to expect there would be a variety of opinions, as you say, we are not all alike. I know I am like no other :lol: I wouldn't want to be!

Cheers Peter

[Stardrifter_WA]

Greg, it is to be expected, with nine months above parity it has remained stubbornly strong. Nobody expected that to last. But then, there has been a lot of stimulus in the US and we will have to wait and see how that plays out. The underlying problems of debt isn't going away any time soon. Hey, we may even be in more debt that we realise, just have to wait for tomorrows budget to find out. I doubt it will be good news. :sadeyes:

But then, look on the bright side.....any day you wake up still sucking in air is a great day! :lol:

Cheers Peter

[johnt]

Ok Peter,
Last one...:)
I was replying as a pleasant break while I was working on a document, so I guess what I really meant is that now that the topic may have taken off, I probably should bail out and continue working on that document. How else will I eventually be able to save up for the Takahashi!! (OK, I could have said Astro-Physics, but by the time I make it to the top of their lists, I could be retired, living on savings, and wanting the interest rates to increase myself :lol:).

[Stardrifter_WA]

I sure hope you are not retiring any time soon then :lol: :rofl:

[JB80]

I wish the dollar was as high as it is now when I moved here and spent most of my AUD. I'd have much more left now or maybe just a bit more at least.

I'm genuinely shocked at the cost of living back home now, it just means we will have to work harder and invest wiser before coming back.

[mithrandir]

When we left home the $ was about 1.02. Today - 6 days later - it's 0.97. In effect the price of SWMBO's birthday present rose about 50 CHF overnight.

[Gem]

I have sympathy for retirees. However, generally I would prefer the dollar to go down a bit more to help our exporters who have done it tough recently.

[gary]

Hi Andrew,

Currencies are always traded in pairs.

In the last week, the Aussie had only fallen less than 1 cent against the Swiss Franc (CHF).

By way of further example, over the past week, it has been almost steady against the Yen.

What we are currently seeing is more a case of the US Dollar rising against other
major currencies it is trading against rather than the Aussie weakening against
them.

For example, by comparison in the past week, the US Dollar gained about US0.03
against both the Swiss Franc and the Yen.

Traders are starting to go long on the US Dollar on the back of announcements
that Quantitative Easing would be slowing and on indicators that the US economy is
improving.

Enjoy your trip! :thumbsup:

[astroron]

Could you tell me what Australia manufactures in any great volume to make any difference:question:
We have a very small manufacturing sector, and have had for a very long time, and it is only getting smaller IMHO.
If we invent,make anything of value, we sell the design and production to an over seas company then buy the product of them:screwy:
PS The ARGO NAVIS is an exception. ;)
Cheers:thumbsup:

[gary]

Hi Ron,

I might be able to partly answer that. :)

Here are two sets of percentages I could find by searching, the first set for exports and
the second as percentages of Australian GDP for the period around 2011.

Exports (2011)
Minerals and fuels : 50.6%
Services : 16%
Manufacturing : 13.3%
Rural : 10.8%

Source -
http://www.dfat.gov.au/publications/trade/trade-at-a-glance-2012.html

Activity as contribution to Australian GDP (2010-11)

Mining : 7.23%
Manufacturing : 8.17%

Source -
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Value%2 0of%20goods%20and%20services%20prod uced%20by%20Australian%20Industry~2 40



As you know, I am a big supporter of manufacturing in Australia but you are
right in that worryingly the manufacturing sector has been contacting over time.

As you rightly point out, many Australian companies have succumbed to
off-shoring.

Nevertheless, manufacturing still makes a considerable contribution to the Australian economy,
as the percentage of GDP figures reflect. As at this moment, indications I
have read are that the manufacturing and mining contributions to GDP are about the
same, around 7%.

However, the export figures are the most relevant for this thread as far as
their exposure to the weaknesses of other currencies.

As you will be aware, the Americans, British Swiss, Japanese and so on have been
"printing money" in recent periods, keeping their currencies artificially low.
As a result, the Australian Dollar has certainly defied gravity of late and is not
as strongly correlated to commodity prices as it once was. One recent result of this
levitation act is that it caught Treasury bureaucrats by surprise with tax revenues
lower than expected, contributing to this year's deficit.

Wildcard manufactures electronics here in Sydney and we're proud of the fact that
we are a net exporter.

[astroron]

Thanks Gary.:thanx:
Quote)
Nevertheless, manufacturing still makes a considerable contribution to the Australian economy,
as the percentage of GDP figures reflect. As at this moment, indications I
have read are that the manufacturing and mining contributions to GDP are about the
same, around 7%.
end)
I would hazard a guess that the biggest percentage of the 7% would be small busyness's such as your self.
Cheers:thumbsup:

[gary]

Hi Ron,

Your are welcome.

I would have to dig deeper to find what percentage of total exports do small businesses
contribute. It is an interesting question.

DFAT statistics shed some light on the amount of manufactured goods Australia exports
and their breakdowns.

The Australian Bureau of Statistics defines manufacturing in these terms -



However, manufacturing can be divided into simply transformed goods, such as
steel and some chemicals and elaborately transformed goods, such as clothing
or computers.

Of the $41.6 billion of manufactured exports in 2011-12, $15.7 billion were engineering
products. The mix of these were -

Machinery for specialised industries $4.2 billion
Office & telecommunication equipment & parts $2 billion
Road motor vehicles & parts $2.6 billion
Other transport equipment & parts $1.8 billion
Professional, scientific & controlling instruments & apparatus $2.1 billion
Other engineering products $3 billion

Some examples of other elaborately transformed goods include --
Pharmaceutical products $6.4 billion
Essential oils, perfume & cosmetic products $490 million
Plastics and articles of plastic $617 billion

Source -
http://www.dfat.gov.au/publications/stats-pubs/trade-in-primary-and-manufactured-products-2011-12.pdf

Here are a selection of some random small businesses from the AusIndustry web site that showcase just a few of the types of things people are doing out there -

http://www.maptek.com/
http://www.rubiconwater.com/
http://www.catavolt.com.au/
http://www.podmx.com/

[Steffen]

Isn't it a bit too early to call the end of the world? After its record high in July 2011 the AUD dipped below today's rate three times – in October 2011, November 2011 and June 2012. It always came back, albeit not to the record high of US$1.10 or thereabouts.

Cheers
Steffen.

[UniPol]

Should have bought it at $1.10

[bojan]

Ron, since you asked me a direct question, I will try to present my own private view of the subject we are discussing here.
For the last 22 years I was watching a sad decline in manufacturing (I am talking about electronics industry, because I was working in that sector) and pulling all activities of all big players in communications industry manufacturing out of Oz - Philips, Motorola, Nokia, Ericsson, NEC.... they are all gone now from this country, both as manufactures and R&D centres... because elsewhere it was cheaper to do business.
At some point in time Australia was very cheap environment for NEC Japan (because of strong Yen, and thanks to this fact, I had my job as R&D designer for quite a time.. but Japan as a whole went into trouble, and then China become attractive for them due to cheap labour, so my job was gone 4 years ago.
My last job was a position of RF design engineer at PBN Global - originally Australian manufacturer of CCTV infrastructure for signal distribution (fibre, RF amps for cable and so on), before they completely moved all their operations to Beijing, China (well, now they can have 5 local engineers for the same money as me only), actually I was even involved in training program for locals (students and graduates) over there.. not that this was really needed, since Chinese engineers were and are quite capable as a matter of fact.. as is everyone else.... so I could say that I was digging my own grave by doing this over there (and I do not feel bad at all about this - it was the only reasonable course of action for the company management to do in a given circumstances.. if I were the owner, I would have done exactly the same thing)
Here in Oz now they have only a brand (because "Australian company" still looks and sounds better than "Chinese" on global market.. but not for long, IMO).

All this is partly caused by high AU $ (or weak RMB).
Since I lived in Beijing for quite some time over the last year, I have a rough feeling about buying power of locals, compared to buying power of us here ... it is actually not that much different (meaning - for the average Chinese engineer's salary they can buy roughly the same amount of bread and butter as we can buy here, for average AU salary. Some things are cheaper, some are more expensive, but as overall cost of life is concerned, the real difference is not that huge.
It becomes apparently huge when/if we start to convert $ and RMB's back and forth - then some may be fooled into thinking that we are much richer.. not so IMO.

Yes, you are right, manufacturing is getting smaller and smaller - I think we lost momentum a long time ago, and the critical mass of local expertise, suppliers and other factors required for self-sustainable manufacturing sector simply dissipated over time... I am really not sure what our kids will do in the future (apart from services and hospitality... clever country, eh?)

[Stardrifter_WA]

Hi Bojan,

I found the same thing in Thailand, the wages vs cost of living is about the same. The biggest difference of course was changing $ in Baht, I felt positively rich. No wonder the Thai women like us Aussies, they think we are all rich, even when we aren't. :sadeyes: I was in north eastern Thailand and I could easily live there. The only thing that made me come home is that I didn't liked be fussed over. As much as that sounds great, I like to do things myself. I think I am as little too independent to fit in there. And besides, I rarely saw stars there, it was always overcast.

Changing Baht back to $ was a little sad though.

For now, it seems like China is the place to be. My youngest son lives in Southern China and loves it. Fortunately, he can read, write and speak Chinese.

Cheers Peter

[mithrandir]

No Internet for a couple of days.

Gary, that 1% was about CHF 50. :(


Since we left home it has rained for part of every day. It's snowing on the Matterhorn and sleeting/raining here in Zermatt.

[LewisM]

Finished all my offshore purchases for a while JUST before it went under :) My last purchase as at 1.04 :)