Applied Research on Australian Dollar

This report analyzes the impact of the Australian dollar on the country's economic growth, foreign exchange reserves, and balance of trade. It discusses various factors influencing the dollar's value, including GDP growth, foreign investments, and trade policies. The report also highlights the implications for businesses and investors, providing recommendations for navigating the changing economic landscape.

RUNNING HEAD: Applied research on Australian dollar 1
Name of student-
Title-Applied research on Australian dollar
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Applied research on Australian dollar 2
Executive summary
This report contains details fact and currency impact on the economic growth of
particular countries. It is evaluated that value of money is based on various factors such as
national economic growth of particular country, gross domestic product rate, changes in
purchasing power parity, foreign business transactions and other economic policies of
government. It is evaluated that Australian economic has risen very drastically and shown
wide amount of changes in the Australian dollar and foreign exchanges reserve on domestic
and international level.

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Table of Contents
Executive summary...............................................................................................................................1
Introduction...........................................................................................................................................2
Research aim and objective...................................................................................................................3
Research finding....................................................................................................................................3
Group of people who will be significantly affected...............................................................................4
Trend of Austrian dollar.........................................................................................................................5
Decision statement for two business....................................................................................................6
Business decision statement- Investment by Apple incorporation in Australia.................................6
Business decision statement- Investment by Australian company Morrison....................................7
Research objective................................................................................................................................7
Hypothesis in this research....................................................................................................................7
Recommendation..................................................................................................................................8
References.............................................................................................................................................9

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Introduction
With the increasing ramification of economic changes and developing growth of
Australian economy, it is evaluated that Australian country has been showing several ups and
down in its value price throughout the time. It is determined that if value of money in
particular economy is dependent upon several factors such as national income, economic
growth of particular country, gross domestic product rate, changes in purchasing power parity
and foreign business transactions. Australian economy has shown various ups and down
throughout the time. Foreign trade and positive balance of trade is the strong pillar to make
changes in the Australian dollar rate of world level. However, throughout the time, Australian
economy has increased its gross domestic product rate by 8% as compared to its last 10 year
data. The main impact of this level of appreciation on Australian dollar could be seen on the
cheaper import and less expensive tourism in other countries for the people of resident in
Australia (Dollar, 2017). This report reflects the key understanding on the several factors
which positively and negatively impact the Australian dollar and also establish a clear nexus
between Australian dollar rate and US dollar rate in determined approach. In the end of this
report, study shows the clear view points on the balance of trade, Australian economic and
social policies which reflects how Australian dollar has become strong in the international
market as compared to other money (De Bock, and de Carvalho Filho, 2015).
The value of Australian dollar has gone up since late 2008 against the US dollar other
currency in the market such as Euro, Pound and Canadian dollar. After evaluating data from
the secondary sources, it could be inferred that Australian china has made positive oversea
direct investment in Australian market specifically in mining and education business. This
level of investment has increased the budget prepared by reserve bank of Australia (Wątorek,
Drożdż, and Oświęcimka, 2016. However, Reserve bank of Australia with the collaboration

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of other designated authority had prepared various monetary policies to make positive
changes in Australian dollar.
Research aim and objective
This research has been prepared with a view to analyse the positive and negative
impact of increasing Australian dollar on the gross domestic product and national growth of
Australia on international level (Edwards, Othman and Burn, 2015). However, after
evaluating the Australian dollar rate and its impact on the US dollar, it could be inferred that
if Australia could maintain positive balance of trade and increased foreign exchange reserve
then it will surely provide positive impact on the purchasing power parity of people resident
in Australian dollar on their international tourism and import from other countries. The main
aim of this research is to show case clear understanding of factors affecting the Australian
dollar and factors that cause Australian dollar stronger than US dollar in international market.
Research finding
This research has shown the positive inclination of Australian dollar rate on
international level and its impact on the balance of trade and foreign exchange reserve of
country. It is evaluated that if Australia has consistent growth in its GDP rate and national
income and balance of trade on international level then it will surely strengthen the Australian
dollar rate. This research has shown the key understanding on the impact of Australian dollar
on the multiple associated parts of economy such as economic growth of particular country,
gross domestic product rate, changes in purchasing power parity and foreign business
transactions. In this research, it is evaluated that how Australia has observed positive strong
Australian dollar value as compared to other country. However, the value of Australian dollar
value could be evaluated on the basis of trend analysis. This analysis will reflect the ups and

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down of Australian dollar rate and its value throughout the time as compared to US dollar
changing value (Lye and Hirschberg, 2014).
Group of people who will be significantly affected
Australian dollar has become stronger than US dollar throughout the time due to
several factors such as having positive balance of trade and increased foreign exchange
reserve, high level of export, increased foreign direct investment and positive increment in
employment rate of country. On the other hand, US has shown low level of gross domestic
growth as compared to other country. Economy of US has shown 5% increment in its GDP
rate while, on the other side, economic of Australia has shown 8% increment in its GDP rate.
In addition to this, US government has strengthen its import export polices by increasing
tariff and traits on the import and export of country. However, the budget and fiscal policies
of US government and also shown the negative inclination towards increased level of foreign
direct investment in the US economy (Bryan, et al. 2016). There are several persons who will
get affected by the decrease level of US dollar value on international market such as people
who lives in US, government, political party and other countries with whom US government
has entered into business trade on domestic and international level. Furthermore, the main
impact of increased Australian dollar rate could be seen on the high exchange rate between
Australian dollar and other countries. However, the strong Australian dollar rate on
international level will surely decrease the overall foreign direct investment and inflow of
capital in Australian economy. In case of rise in value of Australian dollar, it will provide
inflation in all the price of goods and services sold in the Australian country. It provides that
those investors who are inclined towards investing their capital in Australia will stop their
investment options because of its less availability of return and high cost investment
(Hatfield-Dodds, et al. 2015). This strong dollar rate will minimize the coverage of goods and
services in Australia from the investor’s capital investment. The main impact of this strong

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dollar could be seen on the alliance of country with other countries. This level of increase in
Australian dollar will decrease the export of goods and services to other countries. As other
countries such as UK, EU and china would stop their investment in Australia due to its high
cost of investment and less availability of return. The main impact would be on investors
from other countries who are looking forward to make investment in Australia (Drummond,
2013).
Trend of Austrian dollar
Australian dollar has shown 10% increment in the Australian dollar rate since last five
years. This level of increment has considered due to the several factors such as increased
Australian exports and foreign exchange reserve. It is evaluated that foreign exchange reserve
has also increased by 10% which shows that Australian country has increased its balance of
trade by 12% since last five years. Balance of trade and foreign exchange reserve of country
has 1:1.2 ratio throughout the time (Waldow, Takayama, and Sung, 2014).
Social, environmental and economic analysis
Investors are more inclined towards investing their money in other country due to
high investment rate in Australia. It is observed that purchasing power of people of Australia
has also increased with the strong Australian dollar rate. However, last two years Australia
has observed 14% decline in its foreign direct investment and 18% decrease in its balance of
trade. Reserve bank of Australia has also increased its budget with the increase the Australian
dollar rate on international level. This reflects that government is more inclined towards
providing setting environmental friendly eco system and other business opportunities for
Australian residents (Garling, et al, 2013).

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Furthermore, strong dollar rate on international level may result to destruction of
tourism business. It will showcase the decline interest of international clients who are
planning to visit Australia. It is observed that if the Australian dollar rate and its value
increases then it will provide low level of purchasing power parity and decrease the value of
their money. Therefore, if Australian dollar will shot up as compared to other countries value
rate then all the people who resides in Australia will be more inclined towards visiting other
countries. It will not only make cheaper tourism packages for them but also provide them
increased value of their investment on international level (Fleming and Measham, 2015).
However, some argue that strong dollar could help Australian economy by controlling
inflation, GDP rate and national income as increased level of Australian dollar value on
international level may result to decrease in money supply in domestic market. Increased
level of Australian dollar will make increment in value of import and will also showcase
negative inclination towards overall export of country. This will hamper the positive balance
of trade of country and also showcase negative decline in the foreign exchange reserve of
country on international level. It is further observed that reserve bank of Australia with the
collaboration of other designated authorities are making consistent changes in its monetary
policies with a view to curb the negative impact of negative balance of trade and low level of
foreign exchange reserve (Rogers, et al. 2015).
Decision statement for two business
Business decision statement- Investment by Apple incorporation in
Australia
After evaluating the facts from the secondary sources such as magazines, official
gazette, it is evaluated that if apple make investment in Australian economy then it will have
to face loss of US value on international level due to strong Australian dollar value. However,
this level of increased Australian dollar rate could be curbed by apple only when it could

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increase its overall turnover in Australian market by selling its products to Australian people
(Jamshed, 2014).
Business decision statement- Investment by Australian company
Morrison
If Morrison plc would have change to invest his capital for expansion then it would be
less inclined to make investment in Australia due to its high cost and less return availability.
However, this company would invest his Australian dollar in other countries which will help
it to create value of its investment on international level.
Research objective
This research has several objective which are given as below
To identify the impact of Australian dollar on the capital investment.
To evaluate the impact of rising Australian dollar rate on country’s balance of trade
and foreign exchange reserve
Hypothesis in this research
There are several hypothesis which have been considered in this research such as balance of
trade will go down if Australian dollar rate would increase.
Companies would be less inclined to make investment in Australia due to its low value of
return availability and strong dollar rate.
Investors are more inclined towards buying cheap commercial products with a view to create
value on their investment.
Ethical issues

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The main ethical issues in this research is collecting of data from various sources. All
the data has been collected from the relevant and genuine sources. However, this research
reflects the critical understanding on changes in the Australian dollar and foreign exchanges
reserve on domestic and international level (Khan, 2014).
Recommendation
In this research, impact of Australian dollar on its economic, social and international
balance of trade has been considered. In order to strengthen the deep research on the
Australian dollar, researcher could take into account other research topics such as impact of
economic policies, Gross domestic products rate, and economic factors study and investment
decision analysis on international level. This level of research on Australian dollar impact and
its value risen impact on US country would be helpful for the researcher to evaluate other
associated research. This research has shown the critical understanding which could be
undertaken by the investors before making investment on international level.

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References
Bryan, B. A., Nolan, M., McKellar, L., Connor, J. D., Newth, D., Harwood, T., and Grundy,
M. 2016. Land-use and sustainability under intersecting global change and domestic policy
scenarios: trajectories for Australia to 2050. Global Environmental Change, 38, 130-152.
De Bock, R., and de Carvalho Filho, I. 2015, The behavior of currencies during risk-off
episodes. Journal of International Money and Finance, 53, 218-234.
Dollar, D. 2017. United States-China two-way direct investment: Opportunities and
challenges. Journal of Asian Economics, 50, 14-26.
Drummond, I. M. 2013. British Economic Policy and Empire, 1919-1939. Routledge.
Edwards, J., Othman, M., and Burn, S. 2015. A review of policy drivers and barriers for the
use of anaerobic digestion in Europe, the United States and Australia. Renewable and
Sustainable Energy Reviews, 52, 815-828.
Fleming, D.A. and Measham, T.G., 2015. Local economic impacts of an unconventional
energy boom: the coal seam gas industry in Australia. Australian Journal of Agricultural and
Resource Economics, 59(1), pp.78-94.
Garling, S., Hunt, J., Smith, D. and Sanders, W., 2013. Contested governance: culture, power
and institutions in Indigenous Australia (p. 351). ANU Press.
Hatfield-Dodds, S., Schandl, H., Adams, P. D., Baynes, T. M., Brinsmead, T. S., Bryan, B.
A., and McCallum, R. 2015. Australia is' free to choose'economic growth and falling
environmental pressures. Nature, 527(7576), 49.

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Jamshed, S., 2014. Qualitative research method-interviewing and observation. Journal of
basic and clinical pharmacy, 5(4), p.87.
Khan, S.N., 2014. Qualitative research method: Grounded theory. International Journal of
Business and Management, 9(11), p.224.
Lye, J., and Hirschberg, J. 2014. Gambling with stimulus payments: Feeding gaming
machines with federal dollars. Journal of Gambling Studies, 30(3), 713-727.
Rogers, A.A., Kragt, M.E., Gibson, F.L., Burton, M.P., Petersen, E.H. and Pannell, D.J.,
2015. Non‐market valuation: usage and impacts in environmental policy and management in
Australia. Australian Journal of Agricultural and Resource Economics, 59(1), pp.1-15.
Waldow, F., Takayama, K., and Sung, Y. K. 2014. Rethinking the pattern of external policy
referencing: media discourses over the ‘Asian Tigers’’PISA success in Australia, Germany
and South Korea. Comparative Education, 50(3), 302-321.
Wątorek, M., Drożdż, S., and Oświęcimka, P. 2016. World Financial 2014-2016 Market
Bubbles: Oil Negative-US Dollar Positive. arXiv preprint arXiv:1606.01218.