Below 0.4 USD ? Yes, I reckon it is possible. Australia and Australians need a reality check. Nominal exchange rate is about 2x as high as the real purchasing power of the Aussie dollar - just look at the prices of identical items in USA or Europe. Gives a real incentive to start shooting more though - as you just said
Real purchasing power is only a very minor a factor determining exchange rates. The people who are tipping .40 are the same ones that were forecasting that the dollar would achieve parity with the US$ just 2 months ago. It was commodities prices and high relative interest rates that were driving the dollar to its highs.
Its bad financial news that's driving the dollar down - and has nothing to do with the relative strength of the Australian economy. Investors are moving their capital into the so-called safe currencies - Japanese Yen, the Swiss Franc and the US$. Most other currencies will fall in the meantime. Still I doubt that we'll go anywhere near .40 - I certainly hope not! I'm one of those Aussies out traveling at the moment and am due to head to the US in the next week. Lucky I'm earning enough $US to cover most of my expenses!
