Unlucky traders

Financial Review Aug 18-19 2007

The sharp fall in the Australian dollar is something of mixed blessing for the economy, though on balance should support economic growth over the coming year.

On the one hand, the $A will be a filip to lested companies that rely on offshore earnings, as these will now translate into higher local earnings.
It will also ease competitive pressure on exporters and import-competing companies, particularly hard-pressured manufacturers and service providers that, unlike miners, have not directly benefited from the global commodity boom.

A weaker dollar wukk, however, add to demand and inflation pressures in the economuy, through higher import prices and the competitive boost to internationally exposed companies. in turn, that could add to the case for higher interest rates, though this will depend on how strong the global economy remains. The $A will not add to high interest rate pressures if it is associated with a fall in global risk-taking, and much slower global economic growth.

"It's an extremely volatile market," said Robert Rennie, chief currency strategist at Westpac Banking Corp. "But it's probably too early to say with any great conviction what it means for


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A global credit crunch innitially sparked in the US sub-prime mortgage market meltdown continued to escalate as more financial firms warned of losses and companied struglled to raise funds in the debt market.

Investors frantically dumped shares

Risky assets across the world has been dumped. And this includes the NZ dollars.