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CANBERRA: The National Farmers’ Federation estimates the impact on annual farm incomes of a 1 per cent increase in the Australian dollar to be worth about $190 million. NAB agribusiness economist Phin Ziebell said the dollar had exceeded the expectiations of the bank, which last year tipped the dollar would drop to US70-75c. NAB’s markets research team still predicts the local currency “will spend a considerable time below US75c this year”, but has conceded after the recent rally that this would be later in the year. NAB said the dollar was being driven up by a weaker US dollar and stronger commodity prices, amid higher Chinese demand for Australian iron ore and coal. Commonwealth Bank agri-commodity strategist Tobin Gorey concurred, saying the rise was “a story about the US dollar”, but said most of Australia’s competitors’ currencies such as the EU and New Zealand, had also risen, so the impact was muted. The Commonwealth Bank predicted a further downward trend for the US dollar due to the expected increases in official US interest rates. The bank tipped a further increase in the Australian dollar and forecast it would rise to US80c by March and hit 83c by the end of the year.
