SYDNEY, AUSTRALIA - IN WHAT is likely music to the ears of song fans Down Under, Australia is now the cheapest place on earth to buy an Apple iPod thanks to the plummetting local currency.

The Commonwealth Bank of Australia (CBA), which developed its CommSec iPod index as an indicator of foreign exchange directions almost two years ago, said on Monday the ubiquitous device was cheapest in Australia.

Its survey of 62 countries found that an Apple iPod 8gb nano music player, when measured in US dollar terms, cost US$131.95 (S$194.20) in Australia.

This was about five per cent cheaper than in Indonesia, where the same iPod would cost US$138.47.

In Hong Kong, which was the cheapest spot to buy the music player in the world rankings in July, the cost was now US$148.36.

Commsec chief equities economist Craig James said while the local price of iPods had fallen in Australia and elsewhere since July, the Australian dollar had dropped so steeply that Down Under goods were now 'super-cheap for foreign buyers'.

The Australian dollar, which was approaching parity with the greenback in July when it briefly passed the 98 US cents barrier, has been falling sharply and is currently trading at about 67.38 US cents.

Mr James said the decline in the currency was not all bad news because it will boost trade competitiveness and help insulate the country from the downturn in the global economy.

'Over 2000 and 2001, the Australian dollar fell by 28 per cent to a record low of 47.75 US cents, helping to insulate the economy from recession in the US,' he said.

The iPod indicator, designed as a 21st century variant on the Big Mac index used by The Economist magazine since 1986, works on the theory that the same product should cost roughly the same the world over if exchange rates are working properly.

The index found that the music player, which has been sold by the millions since it was launched by Apple in 2001, is most expensive in South America and Eastern Europe and cheapest in Asia and North America.

The Apple iPod 8gb nano costs US$149 in the United States and US$189.51 in China compared with US$353.20 in Argentina, the most expensive country to buy the product right now, and Brazil where it costs US$271.54. -- AFP