Distributors in Australia who are already battling rising shipping costs, are now facing the volatility of the performance of the Oz dollar against the US dollar which in turn has a knock-on

effect on the price of consumer electronics in the country including TVs, smart home appliances and audio equipment, among others. However, the Oz dollar was recently at its strongest

levels relative to the US dollar in over 18 months at nearly US70¢, though it it’s far from certain that it would stay that way for a sustained period. Bloomberg’s median forecast for the

AUD sits at just 71¢ for the end of 2025 and 2026. For distributors of high-end products, even the slightest swing has a direct impact on the local pricing they have in place for the

Federal Reserve has raised rates from near zero to 5.5 per cent. The Reserve Bank of Australia has also increased rates at a similar pace, though US rates were left about 1 per cent higher

than Australia’s through 2023 and most of 2024. Interest rates in the US, Europe, Canada, and the UK are starting to reverse, and more sharply than in Australia. Central banks in the UK are

forecasted to drop interest rates by about 130bps and 140bps in the US, compared to just 70bps by the RBA. Therefore, US interest rates which were higher than Australia, could possibly be

0.25 per cent below Australian rates by the end of 2025. European rates could drop 180bps below the RBA cash rate (currently 110bps), while UK rates are forecast to align with Australian

rates from their current 65bps premium, according to the Australian Financial Review. All of this could lead to a greater demand for AUD. Of course, there are several factors that could

dampen the demand for AUD. One of the major stumbling blocks is China, where analysts are increasingly suggesting bleak growth prospects. Australia relies heavily on exports of iron ore and

coal, and a softening of demand in the Asian country’s property and infrastructure market has impacted the demand for AUD. Overall, the positive predictions for the AUD by analysts rely on a

weaker USD rather than optimism about the AUD itself. The results of next week’s US Presidential elections could weigh heavily on the AUD, as can tensions in the Middle East. But with

currency movements, they can always beat the forecasts by even the best analysts – as we’ve seen with the Japanese Yen. In April, it fell to its weakest against the dollar since 1990, but

has since then reversed course. The performance of the dollar will be keenly watched by distributors heading into the holiday season which is typically the busiest period of the year for

retailers in Australia.