After falling below 62 US cents, the Australian dollar recovers due to pressure from a stronger US dollar and changes in the economy.

After plunging to its lowest point in over two years—for the first time in that time, below 62 US cents—the Australian dollar has now rebounded. After dropping to 61.83 US cents on Thursday morning, the Aussie was worth 62.11 US cents on Friday afternoon, which was almost the same as it was last week. Since late March and early April 2020, when it fell to this level for the first time since the global financial crisis of 2008, the Australian dollar has not been this low, with the exception of three days in October 2022.

When compared to early October, when it was valued over 69 US cents, the present value is still 10% less. The US dollar's strength, which has increased 7.6 percent to a 26-month high versus a basket of six other currencies over this time, is mostly to blame for the decline.

Donald Trump's victory in the US presidential election and his policies of tax cuts, increased spending, and tariffs have contributed to the stronger US currency by making people anticipate fewer US interest rate reductions in 2025. Trump is likely to impose import taxes, according to IG analyst Tony Sycamore, which might lower GDP projections outside the US and impact commodity prices. The Australian and New Zealand currencies, which are vulnerable to the risks associated with Chinese tariffs, would be impacted by this.

A shift in the Reserve Bank's position in December, following the revelation of dismal third-quarter GDP data that suggested interest rate reductions were anticipated, also had an impact on the Australian dollar. According to Mr. Sycamore, the Australian dollar has already taken into account a lot of negative news and may bounce back if it maintains its position above the October 2022 level of 61.70. It may, however, plummet further lower to 60 US cents if it drops below that threshold.

The cost of US vacations will increase due to a declining value of the Australian dollar, as will the cost of imported products like vehicles and gasoline.