FACTORS AFFECTING SUPPLY AND DEMAND OF AUSTRALIAN DOLLARS

With a floating exchange mark, such as Australias, fork over and lead factors largely determine the dollar signs equilibrium price. The exchange respect is sensitive to changes in both fill and supply, which can frock changes in the equilibrium exchange rate. Another factor, which can arrest the supply and demand of Australian dollars, is intervention in the merchandise by the Reserve Bank of Australia. DEMAND The demand for Australias currentness in the foreign exchange market (Forex) is a derived demand. It is derived from the demand for a countrys exports of goods and services and its assets. In simple terms, people who whitethorn have a demand for the Australian dollar could entangle: Foreigners requisiteing to barter for Australian exports International tourists visiting Australia International intrustors neediness to purchase Australian sh ares or property International firms climb up branches or expanding in Australia Speculators and investors who think the appraise of the Australian dollar depart rise in swear of do a profit. The demand for the Australian dollar will be collide withed by a number of factors. These factors are: The size of it of financial flows into Australia The size of financial flows into Australia from investors who wish to invest in Australia and need to convert their currency into AUD will affect demand for the dollar.

The level of heavy(p) inflow will be change by the level of Australian interest evaluate intercourse to overseas interest rates as hygienic as the level of confidence in the Australian economy. If Australia has r elatively higher(prenominal) interest rates ! and stronger confidence, then this will support capital inflow and increase demand for the AUD. Using this theory, the Australian dollar at the present looks to be in a relatively strong position. Interest rates are set or so to rise (official interest rate has recently been risen 0.25 points to 4.5% and is expected... If you compliments to get a full essay, order it on our website: OrderCustomPaper.com

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