Aussie dollar to hit pre-GFC lows

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The Aussie dollar will drop to US$0.60 at some point next year, Shane Oliver, chief economist at AMP Capital has told Yahoo7 Finance.

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Oliver said the main drivers pushing the Aussie dollar to $US0.60 is mainly the narrowing interest rate gap between Australia and the US.

“Over the next six months we are also likely to see the US Fed hike interest rates, while the RBA in Australia is more likely to cut the rates in that period,” Oliver told Yahoo7 Finance.

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“Another driver of the dropping Aussie dollar is the downtrend in commodity prices along with the normal tendency of the Aussie dollar to overshoot ‘fair value’ when commodity prices are weak.”

The last time the Aussie dollar was US$0.60 was at the end of March 2003, but Oliver said this level would be reached again “some time by the end of next year”.

As for the winner and losers when the Aussie dollar hits US$0.60, Oliver said the main winner would be Australian jobs.

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“Winners would be manufacturers, tourist operators, higher education institutions, other trade exposed service businesses, farmers and miners.

“Losers will be Australian consumers as imports will cost more, especially overseas travel and online items from overseas, plus companies relying on imports,” Oliver added.