Olympic disappointment, blame the dollar

DISAPPOINTED by Australia's performance in the Olympic Games so far? According to the ANZ Bank, blame the high Australian dollar.

Booming dollar

DISAPPOINTED by Australia's performance in the Olympic Games so far? According to the ANZ Bank, blame the high Australian dollar.

In a tongue-in-cheek analysis, chief economist Warren Hogan and foreign exchange strategist Andrew Salter looked back at Australia's Olympic performance over the past century against the value of the dollar.

And they have found the Australian team has been vastly more successful when the currency has been weak than when it's been strong.

They see three factors behind this finding, and although the correlation is thin it does show a broad trend consistent over a number of cycles in the currency.

When the value of the currency is high, Australian athletes travel abroad with more foreign currency, leaving them open to the temptation of foregoing training in favour of enjoying the "fruits of overseas travel", the analysts said.

Also, when the dollar is high, the commonwealth budget generally suffers, suggesting tighter funding conditions for Olympic athletes and support staff.

Finally, with a high currency, a degree of complacency may creep into the national psyche, undermining our aspirations for sporting excellence.

Could this explain why after two days of competition in London, Australia is placing poorly?

It is currently tied in eighth place, based on the total medal count.

Of the 26 gold medals already awarded out of an eventual 302, Australia has just one.

"All the while the currency is trading around levels that in real terms are the highest ever during an Olympic year," Mr Hogan and Mr Salter said,

The outlook is not so good, either.

"If our relationship is to be believed, Australia will place around 16th at the London Games," they said.
"It would be our worst performance since the 1976 Montreal Games, where we placed 32nd."