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What the weak Aussie dollar means for the rest of the economy

The Australian dollar is in the doldrums.That creates a domino effect that stretches all the way to household budgets and might even impact the Reserve Bank of Australia's interest rate decisionsOvernight the Australian dollar was worth about 62 US cents, the equal lowest point in almost five years, dating back to the crash at the start of the COVID-19 pandemic in March 2020.

What the weak Aussie dollar means for the rest of the economy

Overnight the Australian dollar was worth about 62 US cents, the equal lowest point in almost five years. (AAP)The figure was no better compared to other major economies, with one Aussie buying 60 euro cents or 50 UK pence.Last year, our dollar was down 8 per cent against the US dollar, 3 per cent against the euro and 7 per cent against the pound, even as the UK struggled.This hurts the cost of living for an importing nation like Australia, sending the price of anything from overseas higher. It's a bad time for a trip to America, England or Europe, but the Australian dollar remains strong in Japan and New Zealand, including places that use the Kiwi dollar, like the Cook Islands.It's also strong in South America, particularly Argentina.But while it's tough for travellers, it is great news for producers, with Aussie products more affordable internationally.Finally, like so much in Australia, the dollar will depend on the Reserve Bank. A weak dollar forces many prices up, making rate cuts less likely. However, if rates are dropping the dollar will likely follow. It's another factor for RBA governor Michelle Bullock and her board to weigh this year.

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