China’s slowdown is reverberating in Australia, where strategists are cutting their estimates on the local dollar faster than any other Group of 10 currency on the prospects for reduced trade between the nations.
The median year-end forecast for the currency that traders call the Aussie has declined by 2.9 percent since the end of April to $1, or parity, from $1.03, according to data compiled by Bloomberg. As recently as January the outlook was for $1.05.
While Australia’s dollar has tumbled the most this month since September 2011, it’s still 29 percent overvalued as measured by purchasing-power parity based on consumer prices. That’s making the currency even less attractive after the International Monetary Fund lowered its outlook for growth in China, Australia’s biggest export market, this year and next.
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