Australian dollar on the rise

The Australian dollar is on the rise because of a shift in world economic power away from the the United States towards China.

With bargain online purchases and cheap holidays to the United States hanging in the balance, interest in the dollar's next move has perhaps never been higher.

Westpac is tipping the dollar will rise to $US1.20 by mid-decade. A visiting global currency analyst, Dr Savvas Savouri, tipped a rise to $US1.70 by 2014.

By 2020, it is predicted, there will be more middle-class consumers in Asia than the rest of the world put together. In Mumbai, Beijing and countless other Asian cities, this burgeoning middle class has set its sights on all the trappings of life in the developed world, such as cars, fridges, airconditioning and televisions.

The world is not looking at the US any more as the primary economic model for the rest of the world.

Higher export prices relative to import prices means Australia has begun to run trade surpluses again. This means that more foreigners need to buy dollars to buy our products than we need to sell to buy foreign goods, pushing up the value of the Australian dollar.

But the growing Asian middle class also creates a new market for Australian services right on our doorstep. Chinese visitors to Australia outnumbered Japanese visitors for the first time last year.



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