September 30, 2011
The Australian exchange rate against the U.S. dollar has dropped from 110 cents three weeks ago to 98 cents. According to analysts, turbulence in the exchange rate has been caused by uncertainty in the global financial climate, triggered by the ongoing European debt crisis and, in particular, events in Greece.
Experts believe concern about the financial markets is at the root of buyer caution, rather than a lack of demand.
Aside from market uncertainty, analysts attribute this decline to a reaction against last season's high prices in China, coupled with the reduced prominence of European buyers, in particular Italy, following a strong Newcastle sale three weeks ago.
The Australian Wool Exchange's (AWEX) Eastern Market Indicator (EMI) closed this week at 1,193 cents/kg clean, down 42 cents (3.4 percent) on last week's sale. In U.S. terms, the EMI fell sharply by 68 cents (5.5 percent) to 1,168 dollars/kg clean today.
Reprinted in part from The Wool Record Weekly