Customers and tourists in Australia may face higher costs as the Australian dollar dropped to levels not seen since the start of the COVID-19 pandemic. This follows Donald Trump’s announcement of tariffs, which has shaken financial markets.
On Monday, fears of an upcoming global recession led to a significant plunge in the Australian dollar against major trading partners, reaching its lowest point compared to the Euro, British pound, and US dollar since 2020.
This means that S. Australian consumers will have to pay more for imported items from abroad, according to e-commerce specialist Kelly Slessor. Purchases from countries like the US will be especially expensive. Popular international shopping websites like TEMU and SHEIN may keep their prices steady for the time being but could increase in the following weeks.
The decline in the value of the Australian dollar has larger ramifications, especially considering many international transactions are conducted in US dollars, regardless of the country of origin, says retail consultant Mark Baartse. Shoppers could turn to local businesses or shop earlier to avoid the upcoming price hikes as businesses adjust to the tariffs.
International travel is also set to become more expensive due to the decline in the Australian dollar’s value in popular destinations such as New Zealand, Indonesia, and India. This comes at a time when nearly a million Australians had traveled to Japan in 2024, attracted by a strong exchange rate, but the recent fall has seen it drop below 90 Japanese yen per Australian dollar.
Economist My Bui from AMP says that investors tend to buy Australian dollars when they expect a global economic upswing but sell them in times of uncertainty. The Australian economy is heavily reliant on commodity exports, such as iron ore, which would be negatively affected by a global slowdown, particularly in China, due to ongoing trade tensions.
Other major global currencies are performing better against the US dollar, with the Euro and the Japanese Yen rising, while the Indian and South Korean currencies have seen declines.
Australian markets are growing increasingly anxious about the prospect of a global recession, leading to the stock market shedding $160 billion in value early on Monday. Both China and the European Union have announced plans to counter the US tariffs.
Source: https://www.theguardian.com/australia-news/2025/apr/07/falling-australian-aus-dollar-aud-to-usd-value-exchange-rate-travel-shopping
