Abbott Says Aussie at ‘More Comfortable’ Level After DeclineRosalind Mathieson
Prime Minister Tony Abbott said the Australian dollar is at a more “comfortable level” after its recent decline against the U.S. currency.
“I think the dollar at $1.05 did impose certain strains on our economy,” Abbott said in an interview in Beijing today, where he’s attending the Asia-Pacific Economic Cooperation summit. “The levels that we’ve seen it at in recent months are probably more comfortable for more people.”
The local currency has fallen about 8 percent since Sept. 5 as slowing growth in China, Australia’s biggest trading partner, drove down prices for iron ore. The nation’s mining investment boom helped drive the Aussie to a record $1.1081 in 2011, hurting manufacturers such as Toyota Motor Corp., General Motors Co. and Ford Motor Co. which have announced plans to quit making cars in the nation.
The Aussie has averaged about 76 U.S. cents since it was floated in 1983. It was at 86.75 cents as of 2:45 p.m. in Sydney.
When asked whether a slump in iron ore prices would impact on the federal budget and prompt further spending cuts in the the mid-year economic and fiscal outlook, Abbott said the government would “respond to the circumstances we find ourselves in.”
“Just as the iron ore price can go down it can go up as well and I don’t think we should assume the iron ore price is stuck at $75 a ton,” said Abbott, who’s trying to rein in a budget deficit that swelled to almost A$48.5 billion ($42.4 billion) last fiscal year.
Iron ore capped the biggest weekly decline in more than five months last week amid expanding global supplies. Australia is the world’s biggest exporter of the steel-making ingredient.