Australian dollar drops below parity

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The Australian dollar has dropped below parity with the US dollar today.

The rise of the Australian dollar over the past few months took a sharp downward turn to drop below the value of US dollar today for the second time since March. The dollar sank under USD 1.00 in early afternoon trade, hitting 99.98 US cents before bouncing back to 100.21.

Retailers will be keeping a close eye on the weakening dollar, which has made it cheaper to import goods from overseas, the savings of which could be passed on to shoppers. It also encouraged people to book overseas holidays with the knock-on effects of cheaper airfares as demand for flights increased.

The slide comes after a morning of big losses on the local share market after the US Federal Reserve announced Operation Twist – the USD 400 billion plan to kick-start the US economy.

More than $21 billion was wiped off the Australian share market this morning after Wall Street backed away from US Federal Reserve Bank’s stimulus plan.

US stocks dived after the Federal Reserve announced a USD 400 billion stimulus plan to support the US economy – painting a grim economic picture and citing slow growth and risk to recovery.