Appreciating Exchange Rates Of Australia †Myassignmenthelp.Com

Questions: Why It Is Important To Analyze Both The Long Term And Short-Term Impact On The Businesses? What Other Factors Are There That Are Affecting The Trading And Increasing The Exchange Rate? Why There Is A Need Of Reducing The Exchange Rate When It Is Good For Many Businesses? What Should Be Done To Control The Other Asian Countries? Is The Impact Of The Appreciating Exchange Rate Has Only Negative Affect? Policies Should Only Be Focusing In Lowering The Exchange Rate? How To Develop Policies That Can Help In Improving The Domestic Market? Answers: Introduction In the recent times, Australia has impacted the global market immensely. In the current global financial and economic system, the Australian dollar has a major role. The fluctuating exchange rate affect various business sectors and communities on a global level like importers, exporters, international and domestic investors. The value of Australian dollar currently revolves around 0.75 US dollars. It belongs to the group small commodity currencies but its movement affects the companies differently from other small commodity currencies. This difference and the increasing strength of the Australian dollar over the past decade is raising question the mind of economist and becoming a topic of discussion. The report presented here aims to analyze its impact on the businesses and the communities and a brief research methodology is presented to come on the conclusion of the problem statement. Recommendations for the same is also added to provide some endurance to the topic (Alauddin, 2013). Aim and objectives The Australian dollar has developed drastically in the last decade and this is leading to the increased concern. The high exchange rates of Australia will impact on the trade-exposed sectors of the economy which is a major concern for the trade operators and associates. The report presented here aims to identify the sectors getting affected by it and present a research methodology to find a solution and developing policies to control the exchange rates (Azimi, 2016). The Appreciation of Australian dollar is propitious for some of the groups while its unpleasant for others. The result is quite diverse and extensive since for importers it is good news as the imports become really cheap thus increasing the demand of the products imported. On the other hand, bad news for exporters as the exports becomes very expensive which reduces their international completeness thus fall in demand of Australian exports. Australia is a country that is based on natural resources for maintaining the economic stability in the nation and thus exports are very important part of the economic and financial aspects of the country (Christensen, 2016). The low rate of exports will drastically affect the earning of the people and will reflect in the GDP pf the country and its per capita income. Another group of people getting affected by the rising value of the Australian dollar will be tourist. Australian government has many programs in the process to increase tourism in the country as it brings capital for the country. But with the increased rates the tourists will prefer a destination that is pocket-friendly. The major population of Australia is of the students and there is a huge percentage of students coming from other countries to study in Australia. But the increasing rate of Australian dollar it will become an unfavorable condition because with a high Australian dollar rate, education becomes expensive in Australia. If the dollar rate is low it becomes cheaper for the travelers and students as compared to other global destinations hence a preferred destination (Dean, 2017). Businesses affected Among the major businesses which will be affected by the strong Australian dollar is the investment sector. Both foreign and domestic investors will be affected by the fluctuating rates. This will lead to decline in investment opportunities in Australia. A reduction will be seen on the end of domestic investors particularly who invests primarily in the companies which have large share of sales in export market, reason being strong dollar will decline their profits drastically. Since the high rate of Australian dollar will make the assets in Australia seem more expensive than the assets of other countries hence they will not consider to make any short-term investment in Australia. This will affect the economy of Australia dramatically. The decline in foreign investments will result in decrease in productivity of the country (Haque, Topal and Lilford, 2015). The investment brings in new technology and scope of growth in the country, with diminishing investment, these opportunities will be slump. Among the other sectors, tourism will also be remarkably affected. The tourism industry compromises of both domestic and foreign tourists, the domestic tourists will prefer to travel abroad rather than within Australia since its cheaper for them to travel other countries. Similarly, foreign tourist will even prefer to choose destinations other than Australia since due to the strong dollar rate Australia becomes comparably more expensive destination than other countries. This will even have an adverse effect on the economy of Australia. Tourism Industry has both a direct and indirect impact on the GDP of the country. The direct impacts include consumption of tourists and the increase in employments in this industry, indirectly its associated with lot many other businesses like hotel industry and transport industry. Further indirect association is the employments with in these industries (Jackson, 2009). The export and import industry are the other principal industries to be affected, which has a huge impact on many other industries within and outside the country. The appreciation of Australian dollar can cause a deficit in trade due to multiplying import and contracting exports. Since a strong Australian dollar means high exchange rate between Australian currency and other currencies thus the repercussions are the export commodities seems to have some high rates. This decreases the export especially in agricultural and manufacturing sector. Contrary to this the importable commodity appears to be relatively cheaper, hence increase in import. This ascend is seen predominantly in energy resources. To find a solution to such issues it is important to conduct the research and find a solution that may help the investors, exporters, and other business sectors along with every group of people that is getting affected by the increasing rate of Australian dollar. Symptoms The symptoms that shows that the change in the exchange rates of the Australian dollar and its impact on two business sectors that is tourism and trading sector and the need of research are given below: - The general opinion says that the effect of the appreciating exchange rate of Australia is all positive, but the actual impacts are diverse and extensive. Looking on the short-term basis the appreciating exchange rates allows increased imports that provide easy and cheap products for the citizen of the country. The diverse impact shows on the exports as it gets expensive and traders reduce it. The result will be increased domestic spending on foreign products and that will affect the local manufacturers and other business sectors (Khayat, 2017). The decreased exports will have the reduced investment and earning of foreign capital that will affect the countrys per capita income and in the future the result will the lowering exchange rates of the currency. The appreciating exchange rates will attract investors in the country or it may make them select other options. This is a likely symptom that can be ascertained only after the impact is researched and analyzed on. The decrease in the tourism will affect the major economic section of the country. This is a symptom that demands the research of the matter and finding and developing the policies that will help the country to enhance its good earning source Tourism its galore (Luetkepohl and Milunovich, 2015). Other countries with the lower exchange rate will try to take the advantage of the situation and will try to capture the global market. For example, China is the country that has a stable exchange rates and with low labor cost it attracts a lot of global investors to invest in the country (Marmolejo, 2011). Decision Statement and Research Question Decision statement are the decisions that a company, organization, or researchers take to decide how to further in a situation. To reach on this decision statement, it is important to identify each factor associated with it and for that research on the different attributes are taken (Meng, 2015). The decision statements here should be as follows: There is a need of policies to control the appreciating Australian dollar The domestic market and manufactures should be developed to stand against in the competition against the imported foreign products. Literature review The objective of this research is to broaden the understanding about how the appreciating Australian dollar affects the economic, social and business conditions in the country. The Garton and his associates says that there are many reasons for this appreciation and that includes high terms of the trade, strong economic performance, rising resources prices, less risk of government debts and difference in interest of Australia and other countries Garton et al. (2012). Therefore, there is a need to determines the impact of appreciation on the various groups and businesses. Ashvini Ravimohan also agrees with it and explain the effects and impacts of the appreciating exchange rates on various business sectors. The conditions will dramatically be affected by the rising dollar rate, which will affect the inflation, employment scenarios etc (Ravimohan, 2010). It is required to understand both the short-term and long-term consequences of the appreciation. Further it is required to analyze the other factors which affect the appreciation as the exchange rate even depends on the other trading partners of Australia like Japan and the EU. The appropriate research required to be done by the affecting businesses to sustain the economic changes. Another author Lin says that the difference between the stock prices and the exchange rates are in need of determination to find right policies for the country to develop domestically and globally (Lin, 2012). The three hypotheses that is leading the economists take this research ahead includes: - The appreciation of the Australian dollar is not a temporary phase and it needs be controlled by developing policies. The business sectors getting affected are very high in number to take this as a serious point to research. Australian government is not efficient enough to manage the appreciating exchange rate and GDP of the country parallelly. Ethical issues When it becomes difficult to take the decision due personal and professional beliefs, then it is known as ethical issues. The ethical issues that may be considered while deciding the policies and taking decision are as follows: - The appreciating exchange rates increases the value of the country in the global market then is it ethical to make policies to reduce it? What is important providing goods to citizens at lower prices or making policies to improve the local products and market? Conclusion The increasing Australian dollar value is the sign of prosperity of the country but its impacts are not very satisfying and all positive. There is a need of policies that help in maintaining the exchange rates of the country and help in improving the businesses of the country that are getting negatively affected by the appreciating exchange rates. The research questions and problem statement discussed in the task emphasizes on the increasing need of creating a balance in the exchange rates and various business sectors and communities that are getting affected by the changed exchange rate of Australian dollar. Thus, a proper research will help to achieve on the conclusion and will help in effectively developing the policies. Recommendations Recommendations that can help in finding the solution to above-given problem statement and related research questions are as follows: - The government should take steps to control the exchange rate There is need of developing the domestic business sector of the country to make the economy of the country stronger. The business sectors should take individual surveys to identify the impact of the appreciating exchange rate. The communities getting affected should take questionnaires and surveys to identify initial issues and then develop policies. References Alauddin, M. (2013). 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