Economics Folio Two Essay

Submitted By kourtneyjadee
Words: 1031
Pages: 5
Open Document
Stage One Economics A

The Price Mechanism

The demand for the $AUD comes from the people wanting to exchange other currencies for/into the Australian dollar
Factors that affect the demand for the Australian dollar $AUD include things such as the demand for Australian exports. The more demand for Australian exports there is also a higher demand for the Australian dollar, as domestic producers wish to be paid with their own currency. The factors that influence the demand for our exports include relative inflation rates, and consumer tastes and preferences.
Capital Flow is also another factor that affects the demand for the Australian dollar. Investment into Australia will have to be carried out with $AUD. Meaning that as more foreign investors invest within Australian producers, there will be an increase in the demand for $AUD.

People that demand the $AUD include:
Australian exporters wanting to convert foreign earnings back into Australian dollars
Foreigners wanting to purchase Australian assets
Speculators expecting the Australian dollar to appreciate in the future

Factors that affect the supply of the Australian dollar include issues such as the demand for imports by Australia, with increased demand for imports by Australians it will therefore increase the supply of $AUD; causing a currency depreciation. It also works in reverse for a decrease in demand.
Capital out flow is another factor that can affect the supply of the Australian dollar, an increase in capital outflow will therefore increase the supply of $AUD on the ‘forex’ market.
With this factors that influence demand for imports are the level of domestic income, level of competitiveness of import replacement industries, and tastes and preferences.
Yet another factor that affects the supply of the Australian dollar is changes within exchanges rates, the $AUD can appreciate or depreciate as a result of changes in supply and demand if it happens to be a floating exchange rate. A depreciation will make exports cheaper and imports dearer meaning a fall in the purchasing power of the $AUD, and therefore may cause an increase in supply or a decrease in demand. A appreciation, forcing exports to become dearer and imports cheaper means there would be a rise in the purchasing power of the exchange rate, which may be caused due to an increase in the demand for $AUD or a decrease in supply.
Japanese Yen
The graph to the right shows the movement of what the Australian dollar has equalled over the past five years. In particular over the past two years since 2013, the movement of the Australian dollar in relation to the Japanese Yen has been fairly stable after having an extreme depreciation towards the end of 2013 from low 100’s to high 80’s. Throughout 2014 and beginning of 2015 the movement of the $AUD stayed fairly flat with the dollar equalling approximately in the high 90’s to possible 100’s. Although throughout 2015 there was a slight appreciation into 100’s with then depreciation back into the mid 90’s. With this the Japanese Yen currently now sits at a 95.78 compared to the Australian dollar.
Euro
The Australian dollar equals to 0.68 Euro. The Australian dollar in relation to the Euro has been fairly unstable within the last five years but specifically within the last two years since 2013 there have been frequent appreciations and depreciations within comparison with the two currencies.

Pound Sterling
Throughout the past five years as shown within the graph the Ausralian dollar has been fairly stable compared to the British Pound with only a slight deapprepciation here and there. More recently over the past two years since 2013 there as been a slow but constent deapprepciaiton resulting in the current position of the Australian dollar equallying to 0.49 British Pound in 2015.

US dollar
Over the past two years there has been a drastic deappreciation of the Ausralian dollar in relation to the Us dollar, with it currently sitting at the Australian dollar
Show More

Related Documents: Economics Folio Two Essay

32 Opportunities In International BusinessLearning Objective1 Essay

International Business Learning Objective 1. Identify the various opportunities presented by international business. The fact that nations exchange billions of dollars in goods and services each year demonstrates that international trade makes good economic sense. For an American company wishing to expand beyond national borders, there are a variety of ways it can get involved in international business. Let’s take a closer look at the more popular ones. Importing and Exporting Figure 3.6 The United…

Words 2776 - Pages 12

Nicholas Biddle Research Paper

American nationalism when he witnessed the Napoleonic Wars as an aide to the U.S. ambassador to France. Biddle wrote for the literary magazine, The Port Folio, under the pseudonym Oliver Oldschool (Shade, William). He also edited Lewis and Clark’s expedition notes and he was elected into the Pennsylvania State Legislature in 1810. He introduced two important bills there. One created a public school system, and the other was for the renewal of the charter of the Bank of the United States. Biddle was…

Words 810 - Pages 4

Pilgrim Case Essay examples

he were to successfully outbid his competitors would be to convert the current office spaces into condominiums. While the entire conversation process would take about two years and that would be 2 years that he is missing out on revenue, in the end the revenue generated by the condo income is well worth taking a loss the first two years. When converting the space into condos, he would be taking in a profit of about $350 to $400 per square foot. This conversion would include 150 units with an average…

Words 1139 - Pages 5

Year 11 Course Selection Information: Attriving For Excellence

GLEN WAVERLEY SECONDARY COLLEGE SENIOR SCHOOL YEAR 11 2016 Course Selection Information Striving for excellence!! 1 TABLE OF CONTENTS Year 11 course selection timeline ............................................................... 3 Entering subject selections online ............................................................... 3 Course Selection Guidelines ................................................................................ 4 2018 Tertiary prerequisites.. ....................…

Words 8925 - Pages 36

Importance Of A Canal

roads and canals . . . is universally admitted." The question is, who should build them. In some countries, "these improvements may often, in ordinary cases, be left to individual exertion, without any direct aid from Government." In the American case, two major circumstances," whilst they render the facility of communications throughout the United States an object of primary importance, naturally check the application of private capital and enterprise to improvements on a large scale." The first of these…

Words 1870 - Pages 8

Accounting: Generally Accepted Accounting Principles and Money Measurement Concept Essay example

Table of Contents Introduction Objective Accrual Basis of Accounting Concept Going Concern Concept Consistency of Presentation Materiality and Aggregation Offsetting Conservatism Principle Prudence Entity Concept Money Measurement Concept Matching Principle Duality Conclusions Reference Introduction: Accounting is the recording of financial transactions plus storing, sorting, retrieving, summarizing, and presenting the information…

Words 2616 - Pages 11

strategic bussiness management Essay

STUDENT NUMBER-00387834 ASSIGNMENT NAME- INTERNATIONAL FINANCIAL MANAGEMENT. A Report to the Finance Director of Quick Nourish Plc. Supermarket. Chain (QN) for presentation to the Directors to address concerns raised at the recent Board Meeting DATE: 3RD MARCH 2014 NUMBER OF WORDS—2,500 WORDS. TABLE OF CONTENTS PAGES 1. Introduction --------------…

Words 2745 - Pages 11

Media Analysis In Malaysia

Essay: MEDIA ANALYSIS IN MALAYSIA (NEWSPAPERS) INTRODUCTION Newspapers are essential in everyone’s daily life as it is the main source of news since the olden days before the television was invented. Without the newspapers, where does the news come from? Particularly in Malaysia, there are several languages used in the country. The main languages used however are English, Bahasa and Mandarin. Each of these different languages have specially dedicated newspapers to the particular language.…

Words 4104 - Pages 17

Stutzer PPI Essay

performancc-indcx-maximizing portfolio is the same as the popular Sharpe-ratio-maximizing portfolio. The results of the tioo approaches generally differ, however, because of nonnormal levels of skezimess and/or kurtosis in the portfolio attributable to large asymmetrical economic shocks or investments iu options and other derivative securities. An illustrative example will show that the new index is easy to implement and, consistent with empirical evidence on portfolio choice, favors investments with positively skewed returns…

Words 6775 - Pages 28

E-Book and Its Effect on the Industry Essay

Thomson sold o education to concentrate on its professional and news companies; and Reed Elsevier, the giant of science publishing, long ago dropped its trade companies, and it sold o its education arm to Pearson in . The downside of this is that economic synergies dissipate in specialised companies. A company focused solely on the trade market takes fewer risks when making publishing decisions. 2 Information gleaned from sales data systems such as Bookscan are pored over to discern trends and identify…

Words 4928 - Pages 20