Aussie dollar could fall to 90 US cents

DOLLAR dives to an 11-month low and there's worse to come as Greek tragedy unfolds.

Australian dollar

A SENIOR currency strategist has predicted the Aussie dollar could fall to 90 US cents as the world waits to see if Greece can avoid bankruptcy.

Westpac Institutional Bank senior currency strategist Sean Callow told the Sydney Morning Herald the dollar could fall below 90 US cents some time in the next few weeks.

‘‘There is no obvious reason for (the Aussie) to find a base soon if you look at commodity prices, interest rate differentials and the global environment in general,’’ said Mr Callow. ‘‘It’s tough to make a case for the Aussie to hit a low soon.’’

He said he believed the fare value of the Australian dollar was somewhere around 80 US cents.

Overnight the Australian dollar hit an 11-month low after Greek politicians admitted they would not meet their international obligations to cut their deficit. Failing to make the cuts could put their bailout funds at risk. Without those funds, Greece will be in bankrupt within weeks.

At 7.00am (AEDT) today, the Australian dollar was trading at 95.63 US cents, half a US cent lower from 96.17 cents yesterday.

Since 5.00am (AEDT) yesterday, the local unit traded between 95.40 US cents and 96.70 cents.

Western Union analyst David Greene said the rapid fall of the dollar was good news for exporters, domestic tourism, but not so good news for importers or online shoppers.

"Most manufacturers would actually be pretty disappointed," Mr Greene said. "Their production costs are now 10 per cent more than they were a month ago with the fall in the Aussie, so that’s 10 per cent on their bottom line that they no longer have."

Australian manufacturing is already feeling the pinch.

In August steel manufacturer BlueScope blamed the Aussie dollar for the closure of two plants and the loss of 1000 jobs.