Aussie Motorists to Pay More Than $1.50/Litre Petrol Price Due to Fall of Dollar at Lowest Level Since Sept 2010

The weakening value of the Australian dollar would mean that motorists would pay more than $1.50 per litre of petrol within two weeks after the local currency declined 0.7 per cent to its lowest level since September 2010.

However, it is not just the price of fuel that will go up in the coming days on account of the decline of the Australian dollar, but also online retail prices and cost of travel overseas. It would also reduce further chances of the Reserve Bank of Australia further cutting the overnight cash rate in the next few months.

As the local currency traded U.S. 91.7 cents, the price of unleaded fuel went up to its highest level in four months, prompting CommSec economist Savanth Sebastian to encourage affected motorists to look around for lower pump prices.

Petrol is usually the single biggest purchase for most Australian households. With the currency decline, it would add another 3 cents per litre to pump prices over the next 7 to 10 days.

"A further lift in fuel prices could cause consumers to become more fearful and cautious about spending, especially on discretionary or non-essential items," the CommSec economist warned.

Coupled with the fall in the Australian dollar's value is the stock market shedding 1.5 per cent, closing at 4669 points, it lowest level in 2013. Since the weak market conditions of the local bourse in the past six weeks, over $125 billion had been wiped out from the value of Australian companies.

Australians should brace for harder times ahead as analysts forecast the currency could possibly fall below 90 U.S. cents as the American greenback strengthens.

Prime Minister Julia Gillard said that the extension of recent declines in the Australian dollar would help rebalance the country's growth.

"A sustained depreciation of the Australian dollar in those circumstances would be a very good thing, to stimulate further growth in the non-mining sector - while the firms that have adjusted to the historically high dollar stand to benefit from its fall," Bloomberg quoted the PM's speech in Canberra on Tuesday.