Ruqayyah Snyder
The Australian dollar has been on a downward trajectory since September 2024, hitting a five-year low in May 2025. While this may be concerning for Australians planning overseas travel, particularly to the US, a weaker Australian dollar is not all bad news. A lower dollar makes Australian exports more competitive in the global market, boosts domestic tourism, and encourages foreign investment. However, it also results in higher prices for imported goods, which can impact consumers. So, is a low Australian dollar good or bad? It depends on your perspective and personal circumstances.
| Characteristics | Values |
|---|---|
| For Australian tourists going overseas | Bad |
| For foreign tourists and students | Good |
| For Australian companies, their employees, and their shareholders | Good |
| For Australian firms competing with imports | Good |
| For mining companies that sell commodities under contracts in US dollars | Good |
| For Australian importers | Bad |
| For Australian exporters | Good |
| For foreign exporters | Bad |
| For foreign importers | Good |
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What You'll Learn
- A low Australian dollar is bad for Australians travelling overseas
- A low Australian dollar is good for Australian exporters
- A low Australian dollar is bad for Australians buying imported goods
- A low Australian dollar is good for Australian tourism
- A low Australian dollar is good for the Australian economy
A low Australian dollar is bad for Australians travelling overseas
A low Australian dollar is not necessarily bad news for Australians, but it does have negative implications for Australians travelling overseas.
The Australian dollar has been on a downward trajectory since September 2024, losing 10% of its value in three months. This has been driven by a strong US dollar and a weak Chinese economy. The value of the Australian dollar is heavily influenced by commodity prices, which are largely dependent on China's economy.
For Australians travelling overseas, a weak Australian dollar means less purchasing power. This is because a weaker exchange rate makes things more expensive. Juliette Lalli, a 29-year-old from Melbourne, shared her concerns about the falling Australian dollar ahead of her five-week trip overseas: "I'm definitely worried about money now... The pound has been looking so bad, I've decided to stay just a few days in London to make it work."
The Australian dollar has been losing value in popular tourist destinations for Australians, including New Zealand, Indonesia, India, and Japan. Kyle Rodda, a senior financial market analyst at Capital.com, noted that Australians travelling to Japan would find it "a lot more expensive" than a year ago when the exchange rate was more favourable.
Overall, a weak Australian dollar means Australians travelling overseas will have to brace themselves to spend more.
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A low Australian dollar is good for Australian exporters
A low Australian dollar is not necessarily a bad thing. While it may be bad news for Australians travelling overseas, it is good news for Australian exporters. A low Australian dollar makes Australian products cheaper in the local currencies of overseas customers, thus increasing demand for Australian goods and services. This increase in demand for Australian exports leads to an increase in demand for Australian dollars in the foreign exchange market, which causes the Australian dollar to appreciate.
A low Australian dollar also makes Australia a more attractive destination for foreign tourists and students, as it means their money will go further. This increase in foreign tourism and students can stimulate the Australian economy.
Additionally, a low Australian dollar can benefit mining companies that sell commodities under contracts in US dollars. As the Australian dollar weakens, these companies will receive more Australian dollars in revenue, some of which will be paid in tax to the Australian government.
It is worth noting that the impact of a low Australian dollar on exporters may take time to materialise. While the direct effect of an exchange rate depreciation occurs immediately, the indirect effects on export and import volumes typically occur with a lag. Over time, as export and import volumes respond, an exchange rate depreciation is likely to increase the value of net exports.
In summary, while a low Australian dollar may cause concern for travellers, it can have positive effects on the Australian economy by making exports more competitive and stimulating demand for Australian goods and services from overseas customers.
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A low Australian dollar is bad for Australians buying imported goods
A low Australian dollar is generally considered bad for Australians buying imported goods. The Australian dollar has been on a downward trajectory in recent years, most notably against the US dollar, which has been performing strongly. This means that Australians will have to pay more for imported goods from the US, as the exchange rate makes these goods more expensive in Australian dollars.
The exchange rate between the Australian dollar and the US dollar is the most commonly quoted rate in Australian media. In September 2024, one Australian dollar was worth 69 US cents, but by May 2025, this had dropped to 62 US cents, a loss of 10% in just over six months. By January 2025, the Australian dollar had dropped even further to below 62 US cents, and in April 2025, it hit a low of 59.64 US cents, its lowest point since April 2020.
The exchange rate between the Australian dollar and other currencies also affects the price of imports from those countries. For example, the Australian dollar has also weakened against the British pound, and only about a tenth of Australian imports come from the US, with China, ASEAN, and the European Union being more important sources.
The impact of a low Australian dollar on import prices is not immediate, as firms selling imported items often price their goods in Australian dollars. However, over time, these firms will adjust their prices to reflect the higher costs, passing them on to Australian consumers.
A low Australian dollar is not all bad news, however. It can benefit Australian exporters, making their goods cheaper in other countries and thus more competitive. It can also make Australia a more attractive destination for foreign tourists and students, as their money will go further.
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A low Australian dollar is good for Australian tourism
When the Australian dollar is low, the cost of travelling to Australia decreases for foreigners. This means that more people can afford to visit the country, and those who do go can afford to spend more during their trip. This increase in demand can lead to more money flowing into the country, which can stimulate the economy.
A low Australian dollar can also make Australia a more appealing study destination for international students. The cost of living and tuition fees will be lower for those paying in foreign currencies, which can lead to an increase in the number of international students choosing to study in Australia. This can bring significant economic benefits, as international students contribute a large amount of money to the Australian economy each year.
Additionally, a weak Australian dollar can benefit Australian companies competing with imports. When the Australian dollar is low, imports become more expensive, making locally produced goods and services more competitive. This can lead to increased sales and revenue for Australian businesses, which can have a positive impact on the economy and create more job opportunities for Australians.
It is worth noting that a low Australian dollar can also have some negative consequences, particularly for Australians travelling overseas. A weaker currency leads to less purchasing power abroad, making international travel more expensive for Australians. This can impact the decisions of Australian travellers, who may choose to stay for shorter periods or opt for cheaper destinations to save money.
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A low Australian dollar is good for the Australian economy
Secondly, a low Australian dollar can benefit Australian companies and their employees. Australian exporters can sell more when their products are cheaper in foreign markets, and companies competing with imports do better when those imports become more expensive relative to local products. This can provide some economic stimulus when domestic demand is weak. Mining companies that sell commodities under contracts in US dollars, for example, will receive more Australian dollars in revenue, some of which will be paid as tax to the Australian government.
Additionally, a low Australian dollar can discourage Australians from travelling overseas, as their money will not go as far in foreign countries. This means that Australian dollars are more likely to be spent in the domestic economy, further boosting local businesses.
While a low Australian dollar can result in higher prices for imported goods, it is important to note that only about a tenth of Australian imports come from the US, with China, ASEAN, and the European Union being more important sources. Therefore, the impact of a low Australian dollar on import prices may be less significant than it first appears.
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Frequently asked questions
A low Australian dollar is bad news for Australian tourists going overseas as it makes things a lot more expensive. It is also unfavourable for Australians planning to buy imported goods from the US.
A low Australian dollar makes Australia a more attractive destination for foreign tourists and students. Australian products will be cheaper in the local currencies of overseas customers, so exporters can sell more. A low Australian dollar can also be beneficial for the economy overall.
A low Australian dollar can be caused by a variety of factors, including a strong US dollar, instability in the Chinese economy, and commodity prices. The value of the Australian dollar is influenced by the demand for and supply of Australian dollars in the foreign exchange market.
