Already and this is the daily This is the Daily ohs oh, now it makes sense.

Already and this is the daily This is the Daily ohs oh, now it makes sense.

Good morning and welcome to the Daily OS. It's Wednesday, the eighth of January. I'm Sam. The Australian dollar has hit a five year low of sixty one point eighty four US since this week. It's a level last scene during the early stages of the COVID pandemic. With Donald Trump's move into the White House and the potential four harsh tariffs on Australia's major trading partner China only a few weeks away, the currency plunge has sparked years amongst Australian commentators, some politicians and financial experts. But what does a dropped Ossie dollar actually mean for us? Not just when we're planning a trip overseas, but in day to day life. Why is it happening now? Is there real reason to panic? To find those answers, I'm joined today by the Australian Institution. It's Greg Jericho. Greg, thank you so much for joining us. Welcome back to twenty twenty five. How's your break?

Good morning and welcome to the Daily OS. It's Wednesday, the eighth of January. I'm Sam. The Australian dollar has hit a five year low of sixty one point eighty four US since this week. It's a level last scene during the early stages of the COVID pandemic. With Donald Trump's move into the White House and the potential four harsh tariffs on Australia's major trading partner China only a few weeks away, the currency plunge has sparked years amongst Australian commentators, some politicians and financial experts. But what does a dropped Ossie dollar actually mean for us? Not just when we're planning a trip overseas, but in day to day life. Why is it happening now? Is there real reason to panic? To find those answers, I'm joined today by the Australian Institution. It's Greg Jericho. Greg, thank you so much for joining us. Welcome back to twenty twenty five. How's your break?

It was really good. Lots of sitting on the couch watching crickets, so a very nice easy summer.

It was really good. Lots of sitting on the couch watching crickets, so a very nice easy summer.

Good and the couch is probably where you're going to stay because none of us are doing much traveling in the year ahead because of this Aussie dollar. And that's what I want to talk to you about today. I want to read you some headlines, so we've got how the falling Aussie dollar could hit you hard. Aussie dollar under pressure, Australian dollar weekends to lowest rates since COVID. Break this all down for me.

Good and the couch is probably where you're going to stay because none of us are doing much traveling in the year ahead because of this Aussie dollar. And that's what I want to talk to you about today. I want to read you some headlines, so we've got how the falling Aussie dollar could hit you hard. Aussie dollar under pressure, Australian dollar weekends to lowest rates since COVID. Break this all down for me.

Yeah, basically, what this is all about is a bit of a kerfuffle, I guess, regarding exchange rates and the international economy. And it can get kind of confusing for people, especially when you see headlines almost suggesting that we should be panicking about the falling Astround dollar and you think, geez, do I have to go and buy ken goods again and go through the whole COVID crisis all over again. And to be honest, I think it's a little bit overblown. So let's see if we can sort of work through what's actually going on here a bit.

Yeah, basically, what this is all about is a bit of a kerfuffle, I guess, regarding exchange rates and the international economy. And it can get kind of confusing for people, especially when you see headlines almost suggesting that we should be panicking about the falling Astround dollar and you think, geez, do I have to go and buy ken goods again and go through the whole COVID crisis all over again. And to be honest, I think it's a little bit overblown. So let's see if we can sort of work through what's actually going on here a bit.

So break down for me what the top line factors are that would make a currency drop like the Asi dollar drop over the last couple of months.

So break down for me what the top line factors are that would make a currency drop like the Asi dollar drop over the last couple of months.

Yeah, I mean, what you have to think about with the Australian dollar is why are people buying or selling it? And really the main reason you want to buy Australian dollars is because you're buying stuff from Australia, or you think the Australian dollar is a good bet because the economy is going well and you think that you know the value of the currency is going to rise. And while that is a primary factor, the reality is, while we're a fairly large economy compared to America and China, we're quite small and when they start sort of mucking about, we get caught up in the wash. And that's really what we've seen here because there's a couple of things at play. One, China's economy is struggling a bit, and so as a result, they're not buying as much stuff, or their demand for the stuff that they get from us, mainly, iron ore isn't as great as it once was, and sort of the Australian dollar is viewed by investors a bit of a proxy for the price of iron ore, and also how well China is doing, because generally we know if China's doing well, Australia does well. So we've got that in play. Also, what we've got is America actually doing kind of okay, which certainly Carmala Harris and Joe Biden have been trying to tell everyone that actually the American economy is doing well. That did quite cut through during the election. But then you also throw in Donald Trump, and Donald Trump is promising to raise tariffs on everything coming into America and especially imports from China. And what that means is everyone's thinking, oh God, China's already struggling a bit, is this going to hurt China even more? And basically we've just been caught up in that. It's got very little to do with Australia. It's all about China being weak, America kind of attacking China with tariffs, and we caught up in the wash.

Yeah, I mean, what you have to think about with the Australian dollar is why are people buying or selling it? And really the main reason you want to buy Australian dollars is because you're buying stuff from Australia, or you think the Australian dollar is a good bet because the economy is going well and you think that you know the value of the currency is going to rise. And while that is a primary factor, the reality is, while we're a fairly large economy compared to America and China, we're quite small and when they start sort of mucking about, we get caught up in the wash. And that's really what we've seen here because there's a couple of things at play. One, China's economy is struggling a bit, and so as a result, they're not buying as much stuff, or their demand for the stuff that they get from us, mainly, iron ore isn't as great as it once was, and sort of the Australian dollar is viewed by investors a bit of a proxy for the price of iron ore, and also how well China is doing, because generally we know if China's doing well, Australia does well. So we've got that in play. Also, what we've got is America actually doing kind of okay, which certainly Carmala Harris and Joe Biden have been trying to tell everyone that actually the American economy is doing well. That did quite cut through during the election. But then you also throw in Donald Trump, and Donald Trump is promising to raise tariffs on everything coming into America and especially imports from China. And what that means is everyone's thinking, oh God, China's already struggling a bit, is this going to hurt China even more? And basically we've just been caught up in that. It's got very little to do with Australia. It's all about China being weak, America kind of attacking China with tariffs, and we caught up in the wash.

Why do you think commentators journalists go to that level of panic language with something like this, what are the consequences of a week Australian dollar?

Why do you think commentators journalists go to that level of panic language with something like this, what are the consequences of a week Australian dollar?

Yeah, it's almost a bit perplexing to me. Well, not perplexing, given I have worked in media for a long time, so I know there's always you know, clicks with a headline that is all scary, scared quotes work well, but one of the things about an exchange rate is it's neither good nor bad. Now, certainly if you're thinking of traveling overseas, it's bad because if you think of it in dollar terms. Let's think of it.

Yeah, it's almost a bit perplexing to me. Well, not perplexing, given I have worked in media for a long time, so I know there's always you know, clicks with a headline that is all scary, scared quotes work well, but one of the things about an exchange rate is it's neither good nor bad. Now, certainly if you're thinking of traveling overseas, it's bad because if you think of it in dollar terms. Let's think of it.

You're booking a one hundred dollars a night room at a hostel in New York. That one hundred dollars is going to cost you more Ausie dollars.

You're booking a one hundred dollars a night room at a hostel in New York. That one hundred dollars is going to cost you more Ausie dollars.

Yeah, yeah, So basically, I mean the classic when I last went over to America a long time ago, in the winter of two thousand and one, the Aussie dollar was worth fifty US cents. Basically I was paying double. If it was one dollar US, that was costing me two dollars Australian, so very expensive. So when the Aussie dollar falls, as it kind of has, it's gone from about sixty five cents to about sixty two US cents, that means everything is a bit more expensive. So that's not good for people who are thinking of traveling. But let's be honest, that's not a big impact on our economy, and we don't really care if people were going to travel. We'd actually it'd be better for our economy if they stayed home and traveled to Queens Stand or wherever where it really hurts us. Think of it in terms of us buying stuff. So, yes, that accommodation in America is now more expensive. But let's say we were instead of buying a hotel room in America, we're buying, say a book, or we're buying, say an electric good from America. With a low or a falling exchange rate, that makes those imports more expensive. And where we really get hit by this is, of course, when it comes to petrol prices, because petrol prices are all imported. Essentially we're importing our oil and it's all dependent on the world price of oil, and so when our Australian dollar goes gets weaker, all other things being equal, we pay more for petrol and that of course means our inflation generally goes up a bit. So that certainly hurts us and not a good good news during a cost of living crisis where we're already feeling the pinch. And so that's where the main scare is coming from. And you might think, okay, so it's all bad news. Well yes and no, because now let's flip the whole thing.

Yeah, yeah, So basically, I mean the classic when I last went over to America a long time ago, in the winter of two thousand and one, the Aussie dollar was worth fifty US cents. Basically I was paying double. If it was one dollar US, that was costing me two dollars Australian, so very expensive. So when the Aussie dollar falls, as it kind of has, it's gone from about sixty five cents to about sixty two US cents, that means everything is a bit more expensive. So that's not good for people who are thinking of traveling. But let's be honest, that's not a big impact on our economy, and we don't really care if people were going to travel. We'd actually it'd be better for our economy if they stayed home and traveled to Queens Stand or wherever where it really hurts us. Think of it in terms of us buying stuff. So, yes, that accommodation in America is now more expensive. But let's say we were instead of buying a hotel room in America, we're buying, say a book, or we're buying, say an electric good from America. With a low or a falling exchange rate, that makes those imports more expensive. And where we really get hit by this is, of course, when it comes to petrol prices, because petrol prices are all imported. Essentially we're importing our oil and it's all dependent on the world price of oil, and so when our Australian dollar goes gets weaker, all other things being equal, we pay more for petrol and that of course means our inflation generally goes up a bit. So that certainly hurts us and not a good good news during a cost of living crisis where we're already feeling the pinch. And so that's where the main scare is coming from. And you might think, okay, so it's all bad news. Well yes and no, because now let's flip the whole thing.

Yeah, who benefits who benefits from a weak currency.

Yeah, who benefits who benefits from a weak currency.

Yeah, let's say you're a company who is exporting to America. Suddenly it's actually cheaper to buy stuff from Australia. So if you're exporting, you're actually benefiting from that because your company's over in America can buy more of your stuff for basically the same price, and so it actually helps the economy that way. So we get hurt by higher imports, we get help by lower prices for our exports. We still get paid in Australian dollars, so it's all good for us. So it's very much the swings and roundabouts. But you know, certainly most of the panic is a little bit in sort of the Donald Trump joker card of not really knowing is he going to follow through and slap a sixty percent tariff on on everything coming from China. If he does that, that could really wreck some havoc and we might see the dollar start going below sixty US cents. But as is always the case with Donald Trump, who they all knows really what he's going to do.

Yeah, let's say you're a company who is exporting to America. Suddenly it's actually cheaper to buy stuff from Australia. So if you're exporting, you're actually benefiting from that because your company's over in America can buy more of your stuff for basically the same price, and so it actually helps the economy that way. So we get hurt by higher imports, we get help by lower prices for our exports. We still get paid in Australian dollars, so it's all good for us. So it's very much the swings and roundabouts. But you know, certainly most of the panic is a little bit in sort of the Donald Trump joker card of not really knowing is he going to follow through and slap a sixty percent tariff on on everything coming from China. If he does that, that could really wreck some havoc and we might see the dollar start going below sixty US cents. But as is always the case with Donald Trump, who they all knows really what he's going to do.

Well, I find it really interesting how in the economy, and I've kind of picked this up through a couple of conversations with you over the last year or so, there tends to be a little bit of speculation being built into the prices of stuff, So you know, China's currency might be coming down because of the potential of Donald Trump being someone in favor of tariffs. Those actually haven't happened yet, but it's almost like they're getting ready for that. It's funny how then sometimes it the drop when he actually does introduce the tariff might not be as big as we think.

Well, I find it really interesting how in the economy, and I've kind of picked this up through a couple of conversations with you over the last year or so, there tends to be a little bit of speculation being built into the prices of stuff, So you know, China's currency might be coming down because of the potential of Donald Trump being someone in favor of tariffs. Those actually haven't happened yet, but it's almost like they're getting ready for that. It's funny how then sometimes it the drop when he actually does introduce the tariff might not be as big as we think.

Yeah, absolutely right, And certainly if he doesn't raise tariffs to sixty percent, then it actually we might see the dollar go back up because kind of people go, oh, it's not as bad as we feared, so it's all good. Yeah, you very much. Right. A lot of the market investors, they're all trying to anticipate what's going to happen, because that's kind of how you make money. You can't make money investing on things that have happened, because everyone's already factored that in. And also there's been a lot of commentary about interest rates. I'm not as convinced by some who are suggesting that this sort of small fall at the moment in the Aussie dollar might put off an interest rate rise I think that would be a little bit silly on behalf the Reserve bank. It's not going to have a big impact either way on the value of the currency. So if the cost of petrol goes up because of our exchange rate, well, raising interest rates or keeping interest rates the same isn't going to affect that all that much. So there's not much they're going to be able to do to affect the impact. When we're talking America and China, investors know who's the big dogs in that game, and it's certainly not Australia.

Yeah, absolutely right, And certainly if he doesn't raise tariffs to sixty percent, then it actually we might see the dollar go back up because kind of people go, oh, it's not as bad as we feared, so it's all good. Yeah, you very much. Right. A lot of the market investors, they're all trying to anticipate what's going to happen, because that's kind of how you make money. You can't make money investing on things that have happened, because everyone's already factored that in. And also there's been a lot of commentary about interest rates. I'm not as convinced by some who are suggesting that this sort of small fall at the moment in the Aussie dollar might put off an interest rate rise I think that would be a little bit silly on behalf the Reserve bank. It's not going to have a big impact either way on the value of the currency. So if the cost of petrol goes up because of our exchange rate, well, raising interest rates or keeping interest rates the same isn't going to affect that all that much. So there's not much they're going to be able to do to affect the impact. When we're talking America and China, investors know who's the big dogs in that game, and it's certainly not Australia.

Last question for me, Greg, in this journey that you and I are going on building the economic literacy and knowledge and understanding how all of this plays into the news, what's your advice on how closely we should all be paying attention to currencies? Is it something we should be checking every week? I mean, is this something that should be part of our financial diet.

Last question for me, Greg, in this journey that you and I are going on building the economic literacy and knowledge and understanding how all of this plays into the news, what's your advice on how closely we should all be paying attention to currencies? Is it something we should be checking every week? I mean, is this something that should be part of our financial diet.

I would actually say no, not really. I mean, to be honest, I don't check it a lot. And I write about this stuff, I mean, and it's always struck me as a little bit weird that it is in the news every night. We see the value of the Aussie dollar and you know, it's important if you are traveling going to UK at the moment it is basically you're getting half a dollar, you know, and so that is I guess important. But if you're not traveling, and if you're not an importer and exporter, it's kind of not really all that important. It's not going to have a major impact unless there is a massive plunge one way or the other.

I would actually say no, not really. I mean, to be honest, I don't check it a lot. And I write about this stuff, I mean, and it's always struck me as a little bit weird that it is in the news every night. We see the value of the Aussie dollar and you know, it's important if you are traveling going to UK at the moment it is basically you're getting half a dollar, you know, and so that is I guess important. But if you're not traveling, and if you're not an importer and exporter, it's kind of not really all that important. It's not going to have a major impact unless there is a massive plunge one way or the other.

I mean, is massive, like if it gets to fifty cents or lower.

I mean, is massive, like if it gets to fifty cents or lower.

Yeah, and you know, if it plunges like five to ten cents in a week, that's where you start thinking, oh gosh, there's something wrong afoot and there might have to be impacts. Some people might be able to recall about a decade or so when we reach parity with the US dollar and it was great. Everyone was getting on Amazon and buying books and shopping and thinking this is fantastic. Meanwhile, this was horrible for Australia's economy because our exports, especially manufacturing, really suffered because it was very expensive to export straying cars and things like that, and it really hurts. So it's always I think a bit of a warning not to get too caught up in the daily movements and think, oh god, it went up you know, zero point two five percent? Is that? Ma, Should I get really concerned? I don't think so. I think worry more about things like, you know, the unemployment rates and just your own sort of cost of living and looking at what's happening with petrol prices and interest rates, rather than the minutia of exchange rates. Unless there is a real sort of weirdness happening, I don't think people need to which I'm sure they're not watching the six pm news. I don't know I've watched it's the six pm news, But certainly there's no need to be looking at the currency market fluctuations unless you happen to be about to go off for a nice holiday.

Yeah, and you know, if it plunges like five to ten cents in a week, that's where you start thinking, oh gosh, there's something wrong afoot and there might have to be impacts. Some people might be able to recall about a decade or so when we reach parity with the US dollar and it was great. Everyone was getting on Amazon and buying books and shopping and thinking this is fantastic. Meanwhile, this was horrible for Australia's economy because our exports, especially manufacturing, really suffered because it was very expensive to export straying cars and things like that, and it really hurts. So it's always I think a bit of a warning not to get too caught up in the daily movements and think, oh god, it went up you know, zero point two five percent? Is that? Ma, Should I get really concerned? I don't think so. I think worry more about things like, you know, the unemployment rates and just your own sort of cost of living and looking at what's happening with petrol prices and interest rates, rather than the minutia of exchange rates. Unless there is a real sort of weirdness happening, I don't think people need to which I'm sure they're not watching the six pm news. I don't know I've watched it's the six pm news, But certainly there's no need to be looking at the currency market fluctuations unless you happen to be about to go off for a nice holiday.

Greg Jericho from the Australian Institute, thank you for getting off the couch and pauson the cricket to have a chat with me today. Really appreciate you going beyond those headlines and talking us through what this all means.

Greg Jericho from the Australian Institute, thank you for getting off the couch and pauson the cricket to have a chat with me today. Really appreciate you going beyond those headlines and talking us through what this all means.

No, is Sam really good to chat.

No, is Sam really good to chat.

It's always such a pleasure to be joined by such a level headed economic commentator. That's all I've got time for the Daily OS today, though we'll be back again with some headlines in the afternoon. Until then, have a fantastic hump Day and we'll speak to you later. My name is Lily Madden and I'm a proud Arunda Bunjelung Calkaton woman from Gadaghl Country. The Daily oz acknowledges that this podcast is recorded on the lands of the Gadigol people and pays respect to all Aboriginal and torrest Rate island and nations.

It's always such a pleasure to be joined by such a level headed economic commentator. That's all I've got time for the Daily OS today, though we'll be back again with some headlines in the afternoon. Until then, have a fantastic hump Day and we'll speak to you later. My name is Lily Madden and I'm a proud Arunda Bunjelung Calkaton woman from Gadaghl Country. The Daily oz acknowledges that this podcast is recorded on the lands of the Gadigol people and pays respect to all Aboriginal and torrest Rate island and nations.

We pay our respects to the first peoples of these countries, both past and present.

We pay our respects to the first peoples of these countries, both past and present.