The Australian dollar is set to plummet to its lowest level in six years by the end of 2015 – and is tipped to sink even further.
According to the finder.com.au Australian Dollar Survey of 13 leading economists and experts, the Australian dollar is expected to hit US$0.71 by the end of the year.
The experts attributed their forecasts based on expected higher interest rates in the US, a weakening Chinese economy and a slower local resources sector.
“Australian interest rates will stay steady or even fall lower while the US interest rate rises. China’s economy is weaker, our commodity prices weaker, and there’s been chronically soft economic growth in Australia,” Garry Shilson-Josling, chief economist at the Australian Associated Press, said.
“There is also a good chance that weak employment growth, slower population growth, low confidence, buyer resistance to high prices and financial instability in China could combine to weaken housing prices in Australia.”
Domain Group senior economist Andrew Wilson said that with the current concerns around China – and the fact that it is a big driver of Australia’s economy – the weakening in resource prices, “particularly due to concern and less demand from China, will bring a lower dollar for Australia”.
Furthermore, the average forecast from the survey showed the dollar will be trading at US$0.67 by the time it reaches the bottom of the current cycle, which would be a 12-year low for the national currency.
However, not all of the experts agreed that Australia is on a downward cycle, with Propell National Valuers economist Linda Janice Phillips of the belief that the dollar is in the middle of a strengthening cycle, and expects it to climb until hitting a peak in the fourth quarter of 2015.