Australian Dollar has fallen 26% against USD  and  36% against JPY this year. Is this the end of the downfall or there is more to come?

Australian financial system no doubt has similar problem as the rest of the world but analyst say that it is in better shape than Japan or US.  Analysts are hoping that China’s demand for new infrastructure would greatly help.  China remains the Australia’s biggest import and export partner and all eye are on the new $500 billion plan to create more roads, railways and bridges. Further interest rate cuts in Australia is only going to further help the economy.

Estimate by Bloomberg survey says AUD may further weaken to 64 US cents by the end of the year and rally back up to 68 US cents by end of 2009. International Monetary Fund predicts Australia’s growth to expand only 1.8% by June 2009, not bad considering  U.S., Japan, U.K. and the euro region are headed for their first simultaneous recessions since World War II.

Australian Stock Index also dropped 42% this year resulted mainly from decline in Commodity demand.  BHP Billiton Ltd., the world’s largest mining company, fell 36 percent as steel mills in China asked to defer iron ore deliveries because of slowing demand.

There are tough times ahead for most economies however Australia may be the dark horse we all looking for.

Source: Bloomberg

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In last 24 hours Brazilian Real and  Mexico’s Peso rebound as much as 5%  Is it the beginning of global central bank intervention? Lets Talk…

Brazilian Real has fallen 28% in last two months, causing big Latin American companies to brink of bankrupcy. Apprantly companies lost more than USD 2.2 Billion in derivatives. It is about time for someone to step in and take control.

Brazil’s central bank will pump the equivalent of $50 billion into currency markets, its boldest move yet to stop the tumble. The real soared after the announcement, climbing 5.2 percent and erasing an initial slump of as much as 5.8 percent. Authorities said the injection will be in the form of contracts that will allow investors to protect against further declines in the Brazilian currency.

Mexico’s Central Banks took the similar actions and bought $1.1 billion worth of pesos causing it to rebound from a record low, snapping a four-day losing streak. Banco de Mexico’s purchase at two auctions today added to the $12 billion of pesos it has bought over the past two weeks to stem a rout in the currency.

The peso gained 3.3 percent to 13.4170 per U.S. dollar from 13.8790 yesterday. It rose as much as 4.7 percent, its biggest intraday gain since Oct. 13. Earlier the peso touched 14.3017, the weakest level since Bloomberg began tracking the data in 1971.

Venezuela’s Bolivar however made 10 month record low. Its decline arising from falling demands in Crude oil due to slowing economy. Crude oil still remains the biggest export for Venezuela. The bolivar has plunged 44 percent since mid-August to 5.9 per dollar.

I think that we are due to see some action from USD, perhaps a rebound to 1.4000 in coming days. I would love to hear your thoughts on this article, please feel free to comment.
Source: Bloomberg