The desire of Australians to travel and holiday overseas is famously resilient in the face of adverse currency fluctuations – up to a point.
As the Australian dollar continues to slide, the travel industry can be excused for feeling some concern. The dollar’s doldrums should be good for inbound tourism, but won’t help outbound travel.
Big factors hitting currency and share value include sharp drops in China’s share prices, a plunge in the iron ore price and continuing uncertainty over whether Greece will stay in the Eurozone.
These concerns are depressing share prices as well as the Aussie dollar. Australia’s self-funded retirees, who love European river cruising and various other forms of pleasantly indulgent overseas holiday, are particularly susceptible to share movements that can affect their nest eggs and discretionary income.
The Australian share market was hammered yesterday and Aussie stocks tumbled. Regionally, about AUD 500 billion was wiped off Asian markets before a late rally.
Analysts say Australia’s exposure to China poses more of a threat to this country’s economic wellbeing than the Greek problems. China is Australia’s biggest trading partner and Chinese shares have dived about 30% on average since mid-June, with the share market there falling by the equivalent of AUD 4 trillion.
Chinese stocks plummeted yesterday and the country’s securities regulator warned that “panic sentiment” was gripping investors.
The Australian dollar touched a new six-year low of USD 73.90 in early trading yesterday and by close of business was trading even lower at USD 73.84.
It has slumped against many currencies recently. Yesterday, mid-market rates showed the dollar was exactly on par with the Singapore dollar. The Australian dollar was worth 48.2 British pence, 67 European cents, 74.1 US cents, 94 Canadian cents, 70 Swiss cents, 1.10 New Zealand dollars, 25 Thai baht, 9900 Indonesian rupiah, 2.8 Malaysian ringgit and 89.6 Japanese yen.
MEANWHILE, Australian tourists to Greece have been advised to take precautions. While credit and debit cards should still work normally, banks are closed and there’s a real risk of ATM machines running out of cash.
The deadline to find whether Greece leaves the Eurozone is this weekend and banks are likely to stay closed until Monday.
Earlier this week, Australia’s Department of Foreign Affairs and Trade (DFAT) warned: “Visitors [to Greece] should be aware that shortages of essential supplies are being reported, including of medical supplies. “Make sure you have more than one means of payment with you (cash, debit cards, credit cards), and make sure you have enough money to cover emergencies and any unexpected delays.”
DFAT added that its level of advice for Greece had not changed.
“We continue to advise Australians to exercise normal safety precautions in Greece.”
Written by Peter Needham