Home > How Australia’s COVID-19 Response Reflects the AUD Strength

How Australia’s COVID-19 Response Reflects the AUD Strength

To the surprise of many market participants, the Australian Dollar (AUD) was/still is one of the strongest currencies during the COVID-19 pandemic. While in some parts of the world, the pandemic ravaged economies and is responsible for millions of deaths, in Australia things were handled differently – much better than in other countries, offering a platform or a benchmark for how to deal with similar situations in the future.

Judging the Local Currency’s Strength By the COVID-19 Response

One of the arguments for Australia’s better response to the pandemic (and New Zealand’s too), is that, as island nations, they have better control of their borders. However, it can’t be just that, as other islands do exist in the world where COVID-19 ravaged the health system despite tough border control.

Therefore, the explanation must lie somewhere else. As a nation of 25 million people, Australia’s infection rate is so low when compared to other OECD countries that it requires a close look at how it responded to the pandemic.

It did so by focusing on three pillars. First, the country focused on building trust with its citizens. Australia did so by communicating exceptionally well the issue and the solutions – good hygiene, physical distancing, etc. On top of that, both the private and public sectors spoke with one voice.

Second, Australia’s response to the health crisis was data-driven. It harnessed expertise and focused on what really matters. For example, the country introduced one-week mandatory hotel quarantine for anyone visiting the country – no exceptions. This single yet efficient measure was the result of data-driven research, and it was quickly copied in the region. Not in Europe or other developed countries.

Finally, Australia made it possible for the private and public sector to collaborate without friction. As such, the exchange of information as well as the measures taken to combat the virus were quickly understood by both private businesses and the public sector. In other parts of the world, we have seen riots, protests, etc., due to lack of communication and people not able to put up with restrictions anymore.

All in all, a healthcare system’s success during a pandemic translates into economic success. Australia’s economy is closer to pre-crisis levels, with unemployment dropping to levels seen during the 2020 spring. Therefore, the strength of the local currency, the AUD, should not surprise anyone as it simply reflects the huge difference between how the country handled the pandemic and others failed to do so.

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