Does Beijing really have the power to lift up the Australian dollar?
While global markets watched closely for a joint move by Washington and Tokyo to prop up the Japanese yen this week, Australian dollar traders have been laser-focused on the actions of another power: China. Some analysts view the Australian currency as particularly sensitive to policy moves in Beijing. If China intervenes to boost domestic growth, that could also lift the Australian dollar, the…
The Australian dollar has been closely watched by traders, who are keenly observing the actions of China. Some analysts believe that China's policy moves could have a significant impact on the Australian currency. However, Goldman Sachs suggests that the currency's exposure to China is not as strong as commonly thought. According to the report, the Australian dollar is most sensitive to China's demand for commodities, particularly iron ore and liquefied natural gas.
In fact, China is the largest importer of these materials from Australia, purchasing US$73.8 billion worth last year. While China's economy and the Australian dollar are correlated, the link is primarily due to their shared response to US dollar movements rather than a direct China-specific influence. The report indicates that China's recent shift towards a tech-driven growth model, rather than investment-driven growth, may limit the positive impact on the Australian dollar.
Beijing's focus on expanding the "AI Plus" initiative is expected to have a more significant effect on the Australian economy through its influence on technology and infrastructure rather than broader economic growth.
Written by urgent.news from SCMP Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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