Bearish views on the Australian dollar have been welcomed by exporters, who believe a fall of up to 30 cents is needed to soothe weakened exporters.
Describing the Australian dollar as "strongly overvalued", banking giant HSBC expects it will dip below parity with the US dollar in the first quarter of 2012, and trade at about 95 US cents over the next two years.
The forecast is based on Australia's vulnerability to global troubles, the prospect of further interest rate cuts and uneven growth due to the booming mining sector.
"Those sectors that are linked to mining are doing very well, while growth in the sectors which constitute the remaining 80% is weak," it says.
UBS agrees with the valuation, saying the Australian dollar is set for a big drop through 2012.
"The Australian dollar is seen as a commodity currency, given Australia's exports of commodities such as iron ore; we see a drop in commodity prices as the most likely catalyst for a weakening," it said in its Investing in 2012 global report.
The prospect of a rate fall is welcomed by Ian Murray, executive director of the Australian Institute of Export, who says the local dollar needs to fall to around the 80- or 90-cent mark against the US dollar before exporters will feel more comfortable.
"While it's at $US1 or $US1.05, we're going to struggle."
According to Murray, inbound tourism, education, manufacturing, agribusiness and wine are feeling the heat from the high Australian dollar – trading at $US1.03 this morning – but companies in the mining services sector, and linked to Asia, are cruising.
Murray is worried about the prospect of cheap imports from the Eurozone after the Australian dollar reached a record high against the euro last week, warning that manufacturers, agribusiness and carmakers are particularly vulnerable.
"Our exports to Europe are relatively low, we heavily favour imports," Murray says.
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