Australia – boost to terms of trade

I don’t write much about the Australian economy (no, no, don’t think lederhosen and schnitzel, that Austria … Australia’s that place with koalas and kangaroos), but just a very quick note this morning.

The Yuan was fixed at a record high against its peg to the USD yesterday. The AUD has fallen quite hard against the USD in the past few days. China is a huge, HUGE, buyer of Australian goods (when I say goods, I means stuff we have dug out of the ground). HUGE, got it?

So, given the FX moves of the past few days Australia has just had a massive boost to its terms of trade with China. The death of the Australian economy has been greatly exaggerated.

09-Aug-11 01:09 GMT

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