The paper "Rush to Swap Aussie Dollars" is a great example of a Macro & Microeconomics assignment. The article by Collett (2014) describes how Australians are rushing to swap their Australian dollars with other hard currencies. In the article, it is clear that at the time Collett (2014) wrote the analysis, the Australian dollar (AUD) was not inspiring much confidence among its users, hence the rush to trade it in exchange for other relatively stable currencies. The article indicates that the rush in the cited year (2014) was a departure from the tradition, where the demand for other hard currencies would be witnessed as time drew closer to the holiday seasons.
In 2014, however, it would appear that people were willing to swap their Australian dollars earlier than usual because they were not too certain whether the AUD would be stronger or weaker against other major currencies. Peoples’ willingness to trade their AUDs at prevailing market rates at the time was an indication that they did not have the conviction that the AUD would eventually regain its foothold against the American dollar, the euro, and even the Japanese yen. A great percentage of the article is dedicated to explaining how people are securing their money’ s worth by swapping AUD and into other hard currencies and locking the exchange rates. Reading the article, one gets the impression that by locking the exchange rate, consumers have the perception that AUD’ s value will be eroded further, hence the urge to protect their money’ s worth. The article also cites relative interest rates as one of the factors that could be occasioning the weak AUD.
The writer argues that the interest rates in Australia may remain low since the country’ s economic growth is modest, which is not the case with other comparable countries.
Despite the rush to swap the AUD for other hard currencies, the article creates the impression that the currency would hold steady until the end of 2014. Future forecasts by analysts featured by Collett (2014) indicate that the AUD would fall against the British pound and the American dollar. Overall, the article describes how people (consumers) behave in times of uncertainty. Notably, consumers do what they perceive as capable of serving their interests best.
From the article, one also gets the impression that no one knows for sure how currencies will perform in the future. With uncertainty looming, it is only natural that Aussies swapped their AUDs as they did.
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