Australians can expect to pay much more for their fridges and lounge sets in coming months after the dollar dropped to a six-and-a-half-year low this week, with expectations it will fall even further.
Global traders bet heavily against the currency this week after the Bureau of Statistics showed Australia's economy was much weaker than expected, and as concerns mounted about the fallout from China's stock market crash last week and its general economic health.
It coincided with Australia's stock market suffering its worst week in three months, falling briefly below the 5000-points level on Friday, as Japan's market took a pummelling, falling to seven-month lows.
Australia's dollar sank below US70¢ multiple times this week before hitting US69.61¢ on Friday afternoon, the lowest level since April 2009.
Economists said the dollar would likely fall even further as global economic activity continues to weighs heavily.
Harvey Norman founder Gerry Harvey said imports are becoming more expensive as the dollar falls, and he's trying to balance rising importing costs with less confident consumers at home.
"Furniture is going up in price; we will see 20 per cent-plus increases in that at the moment ... but if a washing machine is $799 or $899 it doesn't seem to affect the units sold because people don't think it's expensive at $899," he said.
The lower dollar will hit hard Australians wanting to travel overseas and will make domestic travel options relatively cheaper.
The plunging dollar has lost 37 per cent against the US dollar since its 2011 high of US110¢.
But mining and energy companies will get much-needed help from the currency's return to historically low levels. A lower dollar will make winners of yield-focused shareholders in BHP Billiton and Rio Tinto, who receive dividends twice a year in US currency.
And a plummeting dollar is helping agricultural exports, with beef and lamb farmers enjoying surging demand.
Australian lamb exports to the Middle East have jumped 17 per cent in the first six months of this year, according to Meat and Livestock Australia, the marketer for Australian sheep, cattle and goat producers.
Beef shipments have jumped 11 per cent over the same period compared to this time last year, and are on track to be 2 per cent higher than last year's record of 1.32 million tonnes.
AMP Capital's chief economist Shane Oliver said on Friday now that the dollar had broken through US70¢ it was expected to fall to US60¢ in the next year or so, and possibly fall even further.
"A lower dollar is just what Australia needs right now to help rebalance the economy in the face of the mining downturn," he said.
With BusinessDay reporters
