One private and merchant banking group has predicted that Australia’s dollar could fall under 60 cents, citing the plunge in the Canadian currency.
The Australian Financial Review reports that the chief investment officer of Bahamas-based bank Deltec has said global growth is likely to be strong in future, but resource-heavy economies such as Australia will struggle.
Atul Lele from Deltec said Canada was a six-month preview of what would happen here.
“The Australian dollar, it's going below US70¢ in the next six months quite easily,” he told The AFR.
“More importantly, it's not bouncing back any time soon. I can easily see a scenario where it goes into the US50s.”
Canada’s reserve bank cut interest rates last week to 0.5 per cent as the nation struggles to transition to non-resources-based growth.
Others have forecasted falls in the Australian currency, such as Capital Economics, which tips a fall to US 65 cents by the end of next year.
Commodities-dependent economies Australia, New Zealand and Canada have had three of the three weakest-performing currencies this year, Capital Economics’ John Higgins said last week.
The dollar fell to US 73.82 cents at AEST this morning.