Aussie dollar sinks lower on China woes

The Australian dollar has sunk to a fresh low against the Singapore dollar on further signs of weakness in the Chinese economy.
The Australian dollar has sunk to a fresh low against the Singapore dollar on further signs of weakness in the Chinese economy. PHOTO: BLOOMBERG

The Australian dollar has sunk to a fresh low against the Singapore dollar on further signs of weakness in the Chinese economy.

China, Australia's No. 1 export market, on Tuesday released data showing its manufacturing sector hit a three-year low last month.

This sent the Aussie dollar sliding to as low as 0.9877 to the Singdollar yesterday morning, before inching back to 0.9927 at about 7pm.

In July, the Aussie dollar hit parity with the Singdollar for the first time since 2009. It went as high as about $1.35 in the intervening period.

Phillip Futures investment analyst Howie Lee said China's economic slowdown continues to weigh heavily on the Aussie dollar, while a slump in commodity prices is hurting Australia's export revenues.

Those factors, and a rising greenback, mean its short-term outlook is likely to remain bleak, he said.

"There is a good chance the country may experience its first recession in 24 years, if it fails to find alternative sources of revenue outside of exports to China."

He expects the Aussie dollar to fall to as low as 94 Singapore cents in the months ahead, especially if its interest rates are cut again.

All this is good news for Singaporeans travelling Down Under or with children studying there.

Madam Rozita Husain, 57, whose youngest son is studying in Perth, told The Straits Times: "I still send him the same amount of money every six months, which means he has more to spend. This is quite different from a few years back, when my eldest son was studying there. The (exchange) rate then was much higher and I remember he had to stint on his meals."

Investors with property in Australia will pay less in Singdollar on Aussie-dollar mortgages, said Mr Peter Thng, executive director of Reapfield Property Consultants.

His firm has seen a 40 per cent surge in inquiries among buyers interested in Australian property since the Aussie dollar weakened.

"Investors are taking this opportunity to get into Australia's real estate market, where they still see good prospects and value for the longer term," he said.

A version of this article appeared in the print edition of The Straits Times on September 03, 2015, with the headline 'Aussie dollar sinks lower on China woes'. Print Edition | Subscribe