Australian dollar closes in on parity to Sing dollar

Singapore

THE Australian dollar fell to its lowest since 2009, trading at near parity against the Singapore dollar amid expectations that it could weaken further in the near term.

At the close of Asian trading on Wednesday, one Australian dollar was worth S$1.0049 after hitting a low of S$1.0011 just after 4.30 pm.

One major factor for the weakening of the Aussie dollar is the concern over the slowdown in China, as well as the recent stock market rout, said Sim Moh Siong, currency strategist at Bank of Singapore.

Saktiandi Supaat, head of forex research at Maybank Group, said: "Domestically, the fundamentals (for Australia) are not that great. Iron ore prices aren't helping as well."

In addition, there are expectations for softer growth in China - Australia's biggest trading partner - later in the year.

Mr Supaat said: "Together with higher financial market volatility, which induces risk aversion, the Aussie dollar faces further weakness."

Conversely, the Singapore dollar has remained quite resilient.

For Singaporeans, the increased purchasing power could boost tourism arrivals and spend Down Under.

A spokeswoman for travel agency Chan Brothers said: "Demand for travel to Australia during the June holidays increased by 5 to 10 per cent year on year.

"Singaporeans, being a travel-savvy lot, latch on especially quickly to currency fluctuations to save on shopping and dining. We anticipate a similar increase in performance for the next half of the year."

Spots popular among Singaporeans include the Gold Coast, Melbourne and Sydney, though less-traditional destinations such as Tasmania and Canberra are gaining favour too.

The Tourism Australia website listed Singapore as the country's fifth biggest inbound market for visitor arrivals last year at 372,000.

In terms of total visitor expenditure, Singaporeans registered the sixth largest figure at A$1.2 billion.

Singaporeans who own property Down Under will find it cheaper to service their mortgages, and fees at educational institutions will also become more affordable - assuming the Aussie dollar remains at current levels or trends lower.

On the other hand, the weaker Aussie dollar could discourage some Australians from coming to Singapore. Last year, their numbers fell nearly five per cent year on year to about 1.07 million, going by data from the Singapore Tourism Board.