The Australian dollar has plummeted to its lowest levels in two years and could be heading to the devastating lows last seen during the global financial crisis. After a week of decline, the Aussie dollar slipped to 70.79 US cents on Thursday - its lowest point since February 2016, taking its year to date loss against the US to 9%.
Petrol prices, overseas accommodation and the cost of electrics are all likely to rise as a result of this, which experts say it could drop as low as the 'mid to high 60s'. The drop in the dollar means people will be forced to spend more for food, petrol and overseas holidays.
MacroBusiness Fund chief strategist David Llewellyn-Smith spoke on the reason for the decline, naming the difference between US and Australian interest rates. Llewellyn-Smith said while the Reserve Bank of Australia continues to keep the cash rate at a record low of 1.5 per cent, the US Federal Reserve keeps raising rates.
The Daily Mail explained that a weak dollar means everyday household costs and items become more expensive. Anything that's imported into Australia becomes more expensive, whereas anything that originates locally becomes cheaper.