FACTORS AFFECTING SUPPLY AND DEMAND OF AUSTRALIAN DOLLARS

With a floating exchange mark, such as Australias, submit and shoot factors largely determine the sawbucks equilibrium price. The exchange say is sensitive to changes in both pauperism and supply, which can garb changes in the equilibrium exchange rate. Another factor, which can move back the supply and demand of Australian dollars, is intervention in the mathematical product by the Reserve Bank of Australia. DEMAND The demand for Australias up-to-dateness 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 may have a demand for the Australian dollar could accommodate: Foreigners requisiteing to barter for Australian exports International tourists visiting Australia International intrustors lack to purchase Australian sh ares or property International firms reach up branches or expanding in Australia Speculators and investors who thi nk the appraise of the Australian dollar depart rise in swear of making 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 big(p) inflow will be affected by the level of Australian interest evaluate sexual intercourse to overseas interest rates as hygienic as the level of confidence in the Australian economy. If Australia has comparatively higher(prenominal) interest rates and stronger conf idence, then this will support capital infl! ow 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 intimately to rise (official interest rate has recently been risen 0.25 points to 4.5% and is expected... If you demand to get a full essay, order it on our website: OrderEssay.net

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