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Cheat Sheet: The Aussie Dollar (and what to buy)

Is it wrong that I’m feeling more patriotic about the Aussie dollar almost BEATING the US dollar than I do about the fact we are blitzing the UK at the Commonwealth Games? Last Thursday the Australian dollar reached an all time high of US99.13 cents – the highest rate since the Australian dollar was floated on the currency exchange market in 1983. Economists are predicting that the Aussie dollar will reach parity by the end of this week and potentially go above the US dollar mark later in the year.

I don’t even know what it means exactly that the dollar is strong but it sounds good, doesn’t it? Like we’re clever or something. And it’s certainly a brilliant excuse reason to shop online in US dollars (more about that below).
But it’s not fabulous for everyone. For some (exporters, those who work in tourism) it’s a disaster. I thought we could do with a cheat sheet on the Aussie Dollar, to put a few facts behind the feelings (and the shopping) so I asked MM site co-ordinator Nicky Champ to scour the expert opinions and gather together everything we need to know:

By Nicky Champ

WHY IS IT SO HIGH?

America’s economy is cactus. The United States is still in a recession with high unemployment rates, low housing affordability and low interest rates. The country is struggling to recover and the US Treasury is printing money in an attempt to stimulate the economy and avoid the prospect of a further recession.

The Australian economy is in a better position and is relatively steady with low unemployment and interest rates that are above the median of other countries affected by the Global Financial Crisis.

WHAT DOES PARITY MEAN?

Don’t worry if you hadn’t heard about this word before, our currency If the Aussie dollar can hit equal value with the US dollar, that is US$1.00, then parity will occur. Parity happens when another currency rises to equal the same amount of the other currency it is being compared to.

WHAT SHOULD WE BUY?

Dying to take advantage of this near parity or just want a really good deal, these are where some of the best savings can be found.

 

Clothing: Many clothing sites now deliver to Australia. If not, you could consider setting up a US mailbox address, sites such as Ship2me.com offer this service. Your parcel gets delivered to them and they forward it on to your Australian address. Forwarding prices vary by the weight of the parcel and speed that you want it delivered.

Books: Amazon, Borders and The Book Depository offer great discounts off the recommended retail price we pay in Australia. You could combine your order with a friend to save further on shipping costs.

Shoes: If you are in need of some new running shoes, brands like Nike and Reebok will be some of the best bargains online. Best part is you can purchase different colours and styles that are not available in Australia.

Beauty products: Check the websites of the beauty brands you like, if they do not have an online store, most will direct you to an online retailer. I found Stila products on Urban Outfitters to be more than 50% cheaper than in Australian stores.

Electronics: You can nab big savings here on media players, digital cameras and video cameras. The Kindle eBook reader is currently selling on Amazon for US$139.

WHAT DO WE NEED TO BE AWARE OF?

Bank Fees If you are familiar with online shopping you’ll know that your bank or financial institution can add an international transaction fee on top of your purchase. These vary between 2%-5% so factor them into your budget.

Check return costs Some online stores including free shipping although the downside is that if want to return it, you have to pay for the shipping. Which could cost more than what you paid for it, particularly for clothing.

Appliances Be wary that for some appliances you want to purchase, an adaptor will be required to be able to plug it into Australian powerpoints. Speaking from experience on this one, a GHD Hair Straighter loses a lot of power when it has to go through an adaptor.

Dodgy sites This one goes without saying, but in the midst of snapping up an online bargain it’s easy to get carried away. Ensure that the site you are purchasing from is reputable. Do a Google search on the website and check forums for any bad feedback.

Credit Cards Check your statements and it’s a good idea to have a separate credit card set with a low credit limit of $500-$1000 just for online shopping.

Movies Check the region of the DVD that you are purchasing to make sure that you can view it. In Australia PAL is the standard picture format in the Australia, New Zealand and most of Europe and NTSC is the standard picture format in the USA, Canada & Japan.

Most newer TV sets sold in Australia can also play NTSC, but you should check the player instruction manual and/or contact the distributor if you are not sure.

WHO IS IT BAD FOR?

Oprah, although I suspect she can afford it. The rise in the Australian dollar is not ideal for the tourism industry, as we are a long haul destination for international tourists, fewer tourists will make their way to Australia if they receive less return for their money than in previous years.

Our manufacturers and farmers who export receive less from foreign sales when their returns are exchanged back into Australian dollars and have to compete against cheap imports.

What do you want to buy with the strong Aussie dollar?