An online petition has been trending throughout Australia recently, and boy is it gaining currency.
It was one calling for the leaders of Australia's major political parties to rename the Australian dollar "Dollarydoos".
Being a fan of 'The Simpsons' TV show, I couldn't help but laugh.
'Dollarydoos' refers to a line from the 1995 episode titled "Bart vs Australia" in which an Australian man sees the size of his phone bill, crying "Nine hundred dollarydoos!?"
The idea behind the petition is simple, albeit with obvious flaws (which I'll get to shortly).
To quote the cause, changing the name of our currency to 'Dollarydoos' "will make millions of people around the world want to get their hands on some Australian currency due to the real life Simpsons reference, driving up the value of the Australian currency."
To be clear, I think the petition was likely intended as a bit of a joke – I certainly saw the funny side.
But when I saw the petition had already gathered more than 54 thousand signatures (and counting) on Change.org, it also got me thinking:
A lot of people don't understand how important a weak Australian dollar actually is.
The local dollar has fallen sharply over the last 12 months. It's now fetching roughly US 72.5 cents, down 17% over the last year and nearly 30% compared to October 2012.
Naturally, many also see this as a bad thing. Especially when it's presented in the news alongside crashing commodity prices, a high unemployment rate and forecasts of a potential recession in Australia.
Given those circumstances, it's easy to see how some people may link a weak Australian dollar with a weak economy – fix the dollar and you fix the country.
In truth however, it's quite the opposite – we need a weak Australian dollar to help our economy recover.
Here's how it works
When foreign investors believe they can get a better return on their investment elsewhere, they sell the Australian dollar and buy the currency of a country they believe has better prospects.
Right now, that's the United States with the US Federal Reserve on the verge of increasing interest rates. Higher interest rates means higher returns.
So far, so good.
As the Australian dollar falls, it becomes more attractive to foreign investors again. This, in turn, makes our exports cheaper for them to purchase, thus resulting in greater demand for our goods and services.
Local tourism also benefits. In fact, The Australian Financial Review yesterday reported that the rate of growth in inbound traffic over the past year was almost three times higher than outbound traffic. That means more money being spent onshore.
Indeed, it is these factors that will likely push the value of our dollar up over time – not a name change to 'Dollarydoos'.
There are plenty of other advantages, too
Take the resources sector as an example. BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO) are both major miners who have struggled under the weight of the commodities crash.
As commodities are priced in US dollars, a weaker Australian dollar helps to offset that impact, thus boosting their overall earnings. They pay more tax and distribute more to shareholders so there's more money to go around.
A weak exchange rate also creates a tailwind for many of the companies on the Motley Fool Share Advisor scorecard.
You see, companies with considerable offshore operations, including ResMed Inc. (ASX: RMD), benefit when they repatriate their earnings back to Australia.
The lower exchange rate boosts the amount they earn in Australian dollar terms, meaning more profit for local investors to enjoy.
Scott Phillips, who runs the Motley Fool Share Advisor service, recommended members buy shares of ResMed, a medical device manufacturer, in May 2013.
Those who followed his advice would be sitting on a 60.8% return – more than triple the return from the ALL ORDINARIES (ASX: XAO) in the same time.
It's not too late to profit!
The dollar mightn't fall another 17% over the next 12 months, but it seems it isn't too late to profit, either.
According to The Sydney Morning Herald, Konrad Bialas from TMS Brokers, who is considered one of the best forecasters of the Australian dollar, believes the dollar will fall below US 70 cents before the end of the year.
CNBC also said "Stimulus expectations aside, there are a plethora of factors supporting extended currency weakness."
If that happens, ResMed could certainly continue to benefit – as could a host of other companies on Scott's list of "buy" recommendations!
Unfortunately, out of respect to current members I can't mention the names of any others. But for the discounted price of $199 for a 12 month subscription, you can see for yourself by gaining instant access to every company ever recommended by Scott and his team!
Simply click here to get started today.
Oh, and about that petition? I don't expect the local currency to be renamed 'Dollarydoos' anytime soon…
