Investors may be wondering that with the RBA cutting rates over the past two years and with commodity prices declining, why the Australian dollar remains in...

Investors may be wondering that with the RBA cutting rates over the past two years and with commodity prices declining, why the Australian dollar remains in the mid-90 US cents. The reason is that a currency is a relative concept. It is not the case that Australia's has got much better over the past six years, but things global got so much worse. Australia's debt is higher-rated and is in a lower ratio relative to our economic output. Importantly, it appears that Australian business is adjusting to a higher currency by boosting productivity. This may be why the elevated currency is having less of a dampening effect on business sentiment than has been the case over the past seven years. Businesses with enough balance sheet strength to invest in their capacity and efficiency have a distinct competitive advantage and investors should seek to hold these in their core portfolio. (VIEW LINK)