John Campbell, Portfolio Manager at Avoca Investment Management, shares his views on the domestic impact of a lower Australian dollar

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John Campbell, Portfolio Manager at Avoca Investment Management, shares his views on the domestic impact of a lower Australian dollar. Having a view on a range of macro items is an important input to our process...Currency is one of these macro items. Certain stocks are more currency impacted than others. For instance, a higher or lower A$ is unlikely to drive much change in the earnings of a consumer staple like Woolworths but it is a critical determinant of most Australian mining companies (combined with commodity prices). A lower A$ has differential impacts on sectors within the Australian economy. For instance it is likely to lead to lower outbound travel, higher costs of procuring capital equipment, and higher interest payments for many companies with offshore denominated debt. Overwhelmingly however, our view is that a lower currency will improve the global competitiveness of Australia across a range of exporting and import competing industries. This in turn will be positive for the entire Australian economy which has been labouring under the constricting effects of a high currency for the past several years.


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