Dollar dazzles markets
BYRON BAY foreign exchange cashier Kylie Ryan-Milroy is having a case of deja vu.
The last time the currency exchange ran out of the US greenback was July 2008, when the Aussie dollar hit nearly 98 US cents.
Last week she was once again buying the US currency from wholesalers after a rush in demand and reluctance by sellers to unload the rapidly sagging greenback.
Ms Ryan-Milroy said while some were no doubt speculating, others were taking advantage of the high exchange rate for holidays planned later this year or early next.
Yet her company is only one of many which is closely watching the seemingly unstoppable upward momentum of the Aussie, which yesterday notched up another record as it bounded to a fresh two-year high after hitting 96.24 US cents in early morning trade.
As currency traders breathlessly predict it's only a matter of time before the Aussie reaches, and even exceeds, parity with the greenback, retired head of the business faculty at Southern Cross University, Lawson Savery, warns that not all sectors will benefit from the rise.
He said an increase in the exchange rate had a similar effect of a rise in interest rates because both depressed activity in the domestic economy.
Exporters become less competitive as the prices they charge increase in foreign currency terms, and local companies find it harder to compete with cheaper imports.
The tourism industry also suffers as foreign and domestic tourists opt for cheaper overseas destinations.
The key, Prof Saverysaid, was how long the dollar stayed at its current dizzy heights.
Northern Rivers Tourism chief Russell Mills said a short-lived surge would not harm the local tourism industry, but that a sustained period of a high Aussie may hurt.
If the currency reaches parity with the greenback it would be the first time since the Aussie was floated in 1983.