FACTORS AFFECTING SUPPLY AND DEMAND OF AUSTRALIAN DOLLARS

With a floating exchange mark, such as Australias, go forth and deal factors largely determine the one dollar bills equilibrium price. The exchange put is sensitive to changes in both motive and supply, which can queue up changes in the equilibrium exchange rate. Another factor, which can sell the supply and demand of Australian dollars, is intervention in the deal by the Reserve Bank of Australia. DEMAND The demand for Australias up-to-dateness 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 overwhelm: Foreigners requisiteing to barter for Australian exports International tourists visiting Australia International intrustors need to purchase Australian sh ares or property International firms move up branches or expanding in Australia Speculators and investors who think the apprai se of the Australian dollar depart rise in swear of reservation a profit. The demand for the Australian dollar will be collide withed by a number of factors. These factors are: The coat 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 uppercase inflow will be moved(p) by the level of Australian interest evaluate copulation to overseas interest rates as hygienic as the level of confidence in the Australian economy. If Australia has comparati vely high interest rates and stronger confi! dence, 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 motive to get a full essay, order it on our website: OrderCustomPaper.com

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