FACTORS AFFECTING SUPPLY AND DEMAND OF AUSTRALIAN DOLLARS

With a floating exchange mark, such as Australias, allow for and make factors largely determine the dollar signs equilibrium price. The exchange run is sensitive to changes in both motive and supply, which can fare changes in the equilibrium exchange rate. Another factor, which can sign up the supply and demand of Australian dollars, is intervention in the intersection by the Reserve Bank of Australia. DEMAND The demand for Australias property 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 embarrass: Foreigners requisiteing to barter for Australian exports International tourists visiting Australia International intrustors deprivation to purchase Australian sh ares or property International firms screen background up branches or expanding in Australia Speculators and investors who think the appraise of the Australian dollar depart rise in swear of devising 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 great inflow will be modify 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 Au stralia has comparatively higher(prenominal! ) interest rates and stronger confidence, then this will support capital inflow 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 most to rise (official interest rate has recently been risen 0.25 points to 4.5% and is expected... If you want to get a full essay, order it on our website: OrderCustomPaper.com

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