Australian dollar sinks to new low

Just now sinking to a new low at $83.86:

At the AFR Saul Eslake is making sense:

If US85¢ was a fair value this time last year, a fair value this time around is probably less than US80¢,” Bank of America Merrill Lynch economist Saul Eslake said.

“The long-term average for the currency since it was floated is US76¢. For the currency to be providing stimulus to the economy, it would need to be below its long-term average.

“Our own forecasts are US77¢ for the end of 2015, and US73¢ for the end of 2016.”

I’ll take the under on those forecasts.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.