The Australian dollar hit a fresh six-year low today as worries over China and weak commodity prices took its toll on the currency.
After falling as low as US73.98c the Aussie dollar somewhat recovered to finish the day at US74.49c.
Iron ore, Australia’s biggest commodity fell below US$50 a tonne, marking the lowest level since April and bringing the total losses to 16% in just one week.
The Chinese stock market has dropped over 30% recently with some saying it is the beginning of a crash in the Chinese economy.
BK Asset Management managing director Kathy Lien said the Australian dollar was one of the biggest casualties after the problems with China as well as the drop in commodity prices.
“Investors fear that the Greek crisis, sell-off of Chinese equities and decline in commodity prices could lead to a more dramatic slowdown in (Australia’s economy,” she said.
Rabobank head of financial markets research for the Asian Pacific region Micheal Every said that we could see the Aussie dollar drop below US70c by years, end the story in China unfolds and the measures taken by the government backfire.
“Whatever the government is throwing at the market isn’t working. This is a serious problem for Australia, because where China leads, the Australian economy follows,” he said.
“The much larger story is what’s happening in the Chinese stock market,” he added.
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