The Australian dollar reached 80.99 cents against the US dollar last week, which Prime Financial Group noted has many implications.
Firstly, Prime said in a statement, the high price of the dollar will likely put pressure on the Reserve Bank of Australia to keep rates low despite the optimism from many commentators that rates could rise sooner than was previously expected.
Prime also posited that the strength of the Australian dollar is “doing more harm than good” to the Australian economy’s growth prospects.
“The rising Australian dollar puts pressure on our domestic productivity, and acts as a drag on local growth,” the statement said.
However, this growth is making it more attractive to invest in international share markets, Prime said, and is creating investment opportunities by contributing to underperformance on the part of “several high-quality stocks” that generate much of their revenue from foreign markets.