The skyrocketing Aussie dollar is delivering mixed blessings

This morning the dollar was a touch lower but well supported above 99 US cents, as investors cautiously waited on a raft of US economic data. The unit touched a fresh 27-year high of 99.94 US cents overnight, the closest the unit has been to parity with the US dollar since it was floated on foreign exchange markets on December 8, 1983. By 7am (AEDT) today , the "Aussie" had backed down to 99.40 US cents, down from yesterday's close of 99.61 cents. It touched a low of 98 US cents overnight. Dollar dazzler leads to winners and losers A stronger dollar brings both benefits and disadvantages for the country. Overseas travel and imports - such as electronic goods like iPods - become cheaper as the dollar climbs in value. The Reserve Bank does not target a particular exchange rate, but cheaper imports tend to help the inflation level stay lower. This can help keep the underlying inflation rate within the 2 to 3 per cent target band of the central bank, reducing the need for its board to raise official interest rates. A strong dollar can hurt businesses, particularly manufacturers, that export overseas or compete locally with imports. It also means that our tourism industry suffers as it becomes relatively more expensive to holiday Down Under than travel overseas. For farmers, the higher dollar is a mixed bag. It means their products become more expensive in foreign markets but reduces the costs of imported equipment. The resources sector is relatively protected from a rising dollar as commodities like coal and iron ore are sold in US dollars. But local miners will lose when they repatriate their earnings. WINNERS * Electronic goods such as televisions, white goods, even cars, especially those made in Europe, should be retailing for less in the coming months as current stock bought at higher prices is sold off * Airlines are paying less for jet fuel because it's priced in US dollars, which is leading to cheaper flights and some bargains for travellers * Internet shoppers: take advantage from sites in the US and Britain, offering savings on everything from computer games to CDs, books, clothes and accessories LOSERS * Our winemakers are struggling at the moment because their produce has become so much more expensive for overseas buyers * Any company that exports its goods, or that has an international presence and earns all or part of its income overseas, will be hit * When companies such as Boral, the construction firm, bring their earnings from the US back into Australia, they will buy fewer Aussie dollars, so their bottom line takes a bashing * Our education institutions could suffer as students are priced out of an Australian education and it becomes cheaper to learn in the US or Britain Read more: http://www.news.com.au/business/faq-winners-and-losers-from-the-high-australian-dollar/story-e6frfm1i-1225939013600#ixzz12OZJBDIb