A$ to keep drifting lower – BMI

19 January 2016

After falling to a seven-year low yesterday (Monday, 18th January) against the US$, to 68.6US¢, recent analysis by Business Monitor International (BMI) concludes the A$ is likely to continue weakening over the coming months and average 66US¢ for 2016, versus 75US¢ in 2015.

BMI put the expected devaluation down to falling real interest rate expectations amid weak economic activity due to an unwinding investment boom and property market weakness, coupled with high levels of external indebtedness.

Looking further out, and for the same reasons, BMI are predicting the A$ to weaken further and average 63US¢ in 2017.

From an Australian red meat industry point of view, if the predictions come to fruition, it will be extremely beneficial, especially as at the same time there will be further tariff reductions into Japan, Korea and China. This will be particularly useful at a time of heightened beef competition from Brazil and Argentina, and as US beef production starts to grow after a couple of low years.

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