... 31/3/00. A decrease of 10.19 cents, 17% drop in the past year. Causes to the Low $A- There are four major reasons why the Australian Dollar is weak against other major currencies, they are: 1. The first cause for the dramatic decrease in the Australian Dollar is the U.S Central Bank elevating interest rates too high (1999 - 2000), compared to Australia. This caused a reduction of foreign investment in Australia, and further investment into the U.S economy, causing money to flow out of the Australia's circular flow (leakage). However at the same instance, money is flowing into the U.S economy (injection) increasing the amount of money flow and demand for $US therefore appreciating the U.S dollar. This caused the demand for the Australian dollar to decrease and the U.S dollar to increase. "Rates rose around the world in 1999 and 2000". (Source: BRW: Growth party may be ending - Chris Richardson ...

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