Exchange Rate and the AUD, Essay Example

Discuss the impact of the weak Aussie dollar on Australia’s tourism industry and higher education sector  in recent years.

An exchange rate is an economic concept used to express a national currency’ value in terms of another currency. Therefore, the exchange rate determines and influences the trade deficit, as well as a surplus. Generally, a fallen local currency increases the expensiveness of and bolsters export trade (Alotaibi 2016, p.131). A weak Australian dollar stimulates exports from Australia to other states but makes products entering Australia from foreign countries more expensive. The industry of local tourism in Australia has registered a fortune with a weakening dollar, and studies posit that the tumbling currency has enticed tourists from abroad and within Australia and consequently enabling the rebalancing of the economy (Australian Business Review 2015). The elevation of the tourism industry is created by the fact that Australians consider their currency weak in foreign states, and hence domestic tourists confine themselves to the staycations. On the other hand, foreigners, particularly from China find it easier and cheaper to travel to Australia for their vacations and thus contributing to robust growth in the country’s tourism industry.

Nevertheless, the sector of education in Australia could demonstrate both positive and negative effects as a result of the weak Australian dollar. Firstly, a weak Australian dollar means other foreign currencies will surpass its price. Therefore, quotations of educational service expenses will be lower for international students who wish to pursue an education in Australia (Beatie 2016). This will create an influx of foreign leaners into educational institutions in Australia and an improvement in the country’s revenue and consequently rebalancing the Australian economy. However, the decline in the value of the Australian dollar could be construed as a result of a mixture of various sectors in the economy including education. Thus, if the foreign states interpret that the Australian dollar went down because of its education sector, overseas students will shy away from applying for higher learning in Australia’s educational institutions. The education will, therefore, have an adverse effect in the face of a dropping currency.