The Aussie Dollar heads to US$1

The surging Australian dollar does not appear to have a sort to medium term ceiling, and is now seriouslybeing expected to achieve parity with the US dollar, something that at a nadir 47c several years ago looked like a pipedream. At that time, buying a water bottle and simple sandwhich for lunch in the US could set one back the best part of $15.,23636,22117985-31037,00.html

Fortunately or otherwise the structural inadequacies of the Australian IT economy means that this has largely an upside for IT in Australia. Imports ../../../../../post/2007/07/23/blog_subdomain/of_technology__of_which_Australia_has_an_seriously_shameful_imbalance.css) will come down in unit price, hence more queues at Harvey Norman and the like, and good news for IT equipment manufacturers. Australia's ongoing obsession with large TV's and imported consumer products will also continue. By the way, any suggestions for a strategy that can convince my wife to allow me to buy a 120cm wide TV before the Rugby World Cup in a couple of months are greatly appreciated.

From a services point of view this growth will make Australia an increasingly attractive location for the global delivery providers (Indian and US based), and potentially provide cost savings and relief which is also being impacted by the ongoing record low unemployment currently being seen in Australia. Wages growth in India is potentially being offset by the apreciatoin of the local currency. Other benefits include relative relief from increasing oil prices, raises of which have been tempered by increases in the Aussie Dollar.

The downside of course is for the local IT industry, particularly those who have export markets, their products, largely but not exclusively software will need to ensure increased efficiency and process improvement to help offset price pressure that will occur as a result of the relative appreciation of the dollar. Sadly this contribution to the Australian economy is limited and overshadowed by the extreme balance of payment imbalance for this sector of the economy.

23. July 2007 12:40 by Phil | Comments (0) | Permalink

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