Dropping Aussie Dollar Shows The Cost Of Political Uncertainty

Maybe don't go online shopping to burn time during #AusWaits.

04/07/2016 8:33 AM AEST | Updated 15/07/2016 12:56 PM AEST

As the nation waits for an election result, the Australian dollar is taking a dive and speculation is rife about interest rate cuts and a potential downgrading of the nation's AAA credit rating.

Instability is bad for business. Yet Electoral Commissioner Tom Rogers told the ABC a result for the 2016 Federal Election wasn't expected any time soon.

We were promised jobs and growth but here we are waiting.

"We really are going to have to wait for the very last postal vote to come in," Rogers told the ABC.

"Under the legislation, we have to wait for 13 days after polling day for all postal votes to come in.

"We gave out something like 1.5 million postal vote applications. We've got a little over a million back."

While we wait, here's how the federal election non-result is affecting our nation's coffers.

The Australian Dollar

On Monday morning, the Australian dollar lost about half a cent.

Business Insider reported Wellington strategist Kymberly Martin saying it was most probably a temporary dip.

"History suggests that impact will likely be temporary. Medium-term AUD trends are driven more by global and commodity trends than domestic politics."

Interest Rate Cuts

The Reserve Bank of Australia was set to meet on Tuesday and analysts are speculating whether an interest rate cut would be imminent, to prompt growth.

CommSec economist Savanth Sebastian told Fairfax the RBA would be feeling the pressure.

"The Reserve Bank will think long and hard about providing the economy with another rate cut if activity levels remain relatively soft."

Australia's AAA Credit Rating

Colonial First State economic and market research leader Stephen Halmarick told the ABC there was a very real chance Australia's credit rating would be downgraded, but that it wouldn't be devastating.

"There is not many AAA credit rating nations left in the world -- the UK lost theirs last week and so even if Australia was downgraded, I don't think it is going to have a big impact on increasing our borrowing costs," Halmarick said.

Election 2016: Likely faces in Senate

University of Melbourne associate professor Sarah Maddison said businesses were likely to enter a period of conservatism while an election outcome was unknown.

"The big concern is for business confidence," Maddison said.

"In times of uncertainty, businesses are less likely to invest in themselves and less likely to create new jobs until the dust has settled, and Australia can't afford to wait.

"We were promised jobs and growth but here we are waiting."

Senator-elect Derryn Hinch Why Aussies Attracted To 'Other' Candidates

Maddison, however, said any fear should be tempered with the surety that Australia's faced political instability before.

"We could almost characterise the last decade as a time of political uncertainty," Maddison said.

"We've had successive PMs be deposed by their own party, backstabbing and uncertainty. It's almost become the norm these days and yet our economy is still comparatively strong."

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