Australia’s Dutch Disease More Severe Than Canada’s: Currencies – Bloomberg.
The currency market is diagnosingAustralia with a worse case of “Dutch Disease” than Canada as the commodity-heavy economies suffer the fallout from slumping prices.
After a decade-long boom in raw materials that pushed up their exchange rates, manufacturing in both countries is shrinking and some economists are drawing parallels to the Netherlands when it became too dependent on natural gas after its discovery there in 1959. Traders are betting Australia, which this year announced the closure of its last auto plant, may be slower to adapt to the current plunge in commodities than its North American cousin.
Canada’s dollar is outperforming its antipodean counterpart by the most in a year against an index (BCOM) of developed-market peers, and forecasters from Sydney-based Westpac Banking Corp. to Toronto-based Royal Bank of Canada predict that trend will continue. National Australia Bank has recommended betting against the Aussie versus the loonie since March, and says it has no plans to abandon the trade.
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