For months now the RBA have highlighted their concern about
a strong Australian dollar and we are now seeing the effect this is having on the Australian
economy. The stronger Australian dollar
has caused manufacturing costs for car manufacturer General Motors to rise, and
this coupled with a small domestic market encouraged the firm to stop producing
cars in Australia from 2017. The US car producer Ford announced that it
would stop making cars in Australia earlier on this year, and the new move from
General Motors now poses a threat to the car industry which has increased the
importance of retaining Toyota’s business.
Prime Minister Tony Abbott is holding talks with car
producer Toyota in an attempt to convince the firm to continue to manufacture
motors in Australia and prevent potentially thousands of job losses. This emphasizes
the strain a strong currency is having on business costs, making foreign made cars more appealing to consumers. After the numerous failed attempts at talking
down the Australian dollar, comments from RBA Governor Stevens regarding intervention finally got the
ball rolling. More Aussie weakness is needed, however with the GBPAUD rate
currently at 1.83, the rate is moving in the right direction.
