As I returned to work after the Christmas holidays, I checked in on how the economy was going and was rather startled to read the headline “Panic as Aussie dollar crashes to five-year low”. Cripes. So much for easing into the year.
It wasn’t even a week in and already I was wondering if I needed to rush to the shops and buy up all the canned goods on offer. But, as is often the case with economics and news headlines, things are not as grim as they might seem.
As Stephanie Convery explained last week, all of the kerfuffle is around markets preparing for Donald Trump to take over and possibly bring in 60% tariffs on Chinese imports. That would probably cause the Chinese currency to depreciate at a time when China’s overall economy is pretty weak.
Because we export a lot of iron ore to China, the Australian dollar is often viewed as a proxy for China – and so it has also gone…
