Australian dollar tipped to fall below 60 cents

IF you’re thinking about going to the US, you might want to do it now, as a chief economist predicts the Aussie dollar is headed for another dive.

IF you’re thinking about that trip to the US, you might want to do it sooner rather than later.

Deutsche Bank’s Australian chief economist Adam Boyton says continued soft demand for resources and slower growth in China are among the factors that could force the Australian dollar below 60 US cents to its lowest value against the greenback since at least early 2003.

The Aussie dollar has already tumbled about 20 per cent in the past year and is now hovering just above 70 US cents.

Mr Boyton said Deutsche predicted 18 months ago that the dollar would hit about 65 US cents by the middle of 2016, a statement he said is “looking less stupid by the day”.

“I wouldn’t discount the currency moving into the 50s,” Deutsche Bank’s Australian chief economist Adam Boyton said.

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Hard economic times ... a man watches the ASX trading board in Sydney. Picture: AAP

“I’m not saying in the next 24 hours or anything like that but, as a big picture adjustment, that wouldn’t seem unreasonable to me.

“Particularly if you think you’re looking at a structural slowing in China, the commodity structure will remain under pressure for some time.” The low exchange rate can help boost exports by making them cheaper, increase tourism from overseas and have a positive effect on retail numbers by pricing some Australians out of foreign holidays.

But the effect isn’t entirely positive.

“This fall in the currency is having an enormous effect on the competitiveness of the economy,” Mr Boyton said.

“Unfortunately, it makes us more competitive by making us poorer, as opposed to productivity, which makes us competitive without making us poorer at the same time.”