The Australian dollar hits more than 10-year low amid coronavirus concerns
- The Australian dollar on Monday hit its lowest level in over a decade.
- The currency is uniquely exposed to the risk of coronavirus - China is the country's biggest trading partner, and the Aussie dollar is correlated with metal and oil commodity markets that have unraveled in recent weeks.
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The Australian dollar on Monday hit its lowest level in more than decade, the currency suffering from factors that share a common source: coronavirus. The Aussie dollar traded for as little at 66.61 cents to a US dollar Monday morning before paring some of those losses. The currency is down 4.84% so far this year.
But the rand has weakened 2% against the Australian dollar so far this year, and was last trading at R10.03
What's dragging down the Australian dollar are two of the key relationships that determine the currency's value.
For one, with China being Australia's biggest trading partner, the country is uniquely exposed to the fallout in economic growth that markets predict will come from the Wuhan coronavirus. That virus, which has already killed more than 900 and infected over 40,000, has caused economists across the Street to slash growth projections for China: Friday, economist Ed Hyman predicted zero percent growth for the country this quarter.
Unraveling of Chinese growth has also sent commodity markets reeling, with oil and copper both losing ground in recent weeks as their single biggest source of demand teeters. The Australian dollar is a commodity currency, meaning that as copper and oil decline on coronavirus fears, those losses can play out in the currency as well.
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