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Aussie dollar sinks to decade-low as coronavirus concerns whack local currency

Published: (Updated: ) in Australian News by .

Overseas travel and online shopping from businesses abroad is now more expensive, but a low Aussie dollar could have a surprise upside.

The Australian dollar has hit a more than 10-year low of 67.18 US cents but the good news is that could help soften the economic blow of coronavirus.

US and European markets fell slightly on Friday night on the back of renewed concerns about the virus, but that had been anticipated by the Australian market, which remained flat through the day on Friday.

"Consequently, futures trading in our market actually rose slightly ... it suggests our market will be flat to up slightly, maybe five to 10 points tomorrow," AMP Capitals' chief economist Shane Oliver said yesterday.

The global market's concerns about the virus meant the Australian dollar got "whacked" down to 67.18 US cents, its lowest level since 2009, on Friday night, as commodity prices fell.

While it makes overseas travel more expensive for Australians, it also makes the country more competitive internationally which could soften the blow from the coronavirus impacts, Dr Oliver said.

There's some indication new cases may be stabilising at around 3000 a day, though with pandemics stabilisation can be followed by an increase in new cases.

Confirmed coronavirus cases in Australia.

"If it looks like the number of new cases has peaked then we can be reasonably confident share markets will bottom, but the big uncertainty is when that peak will firmly occur and secondly how big the economic impact will be," Dr Oliver said.

"I think the share markets are quite prepared to live through a short-term disruption but if it drags on then investors will get more and more nervous about it."

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China's global growth could take a substantial hit if workers continue to stay home from work, affecting manufacturing figures.

Why the Aussie Dollar has fallen below 70 cents

Travel bans have already had a flow-on effect for tourism and it could affect education export earnings if students unable to attend university seek fee refunds.

A negative March quarter seems likely for Australia's economy, Dr Oliver forecast.

As well as coronavirus updates, the market is also looking ahead to a busy week for the US including a speech to congress by US Federal Reserve chairman Jay Powell tomorrow, inflation figures on Thursday and January retail sales figures on Friday.

In Australia, December housing finance figures and a National Australia Bank business survey are both due out today, while Reserve Bank chairman Philip Lowe is expected to talk about ongoing interest rate cuts in a panel discussion on Thursday.

Source: 9News

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