Written by Peter Lavelle at foreign currency exchange Pure FX
Money. It makes the world go round, as Liza Minnelli once tunefully reminded us. And if you’re moving to Australia, you’ll want as much of the green paper stuff as possible, especially if you’re trading in your existing pounds or euros for Australian dollars.
Alas, the foreign exchange market is a fickle beast, and the value of the Australian dollar is changing all the time. These past three months alone it’s undergone some serious mood swings, and first climbed then plummeted. So what’s going to happen next? Well, I can’t predict the future (if I could, I’d be a millionaire) but I can provide some guidance as to what might happen to the Australian dollar in coming months. Here goes nothing!
If the Australian dollar were an actress, the past five years would have marked its progression from second-fiddle also-ran to Oscar-winning celebrity. It’s been nothing but success for the emu dollar, as Australia remains the only developed nation to have avoided recession since 2008.
This is because Oz happens to be sitting on perhaps the largest piles of coal and iron ore on the planet, and demand from China for these resources has literally transformed Australia’s outlook. It couldn’t have been luckier if it’d started running gold nuggets in Melbourne one morning. This, in turn, means the Australian dollar has gone from strength to strength, almost doubling its value against the UK pound for instance.
But all good things…
Of course, all good things must come to an end (to invoke a cliché) and lately things have gone a bit pear-shaped for Australia. It turns out having the world’s second largest economy for your biggest customer is really a double-edged sword.
In short, China’s economy has shown serious signs of engine trouble since the start of 2012 and that, in turn, means its endless gorging of Australian coal and iron has slowed. What does that mean for Australia? Suddenly this behemoth source of demand is nowhere in sight! The Australian dollar has lost seven cents against the UK pound in just six weeks because of this.
So what happens next?
Right now then the Australian government is trying all sorts of tricks to get the economy moving again. This includes cutting interest rates to spur demand, taxing mining revenues to stimulate other parts of the economy, and providing subsidies to manufacturing. If it works, like Dracula the Australian dollar could rise again. On the other hand, it’s quite possible Australia’s luck has run out, as the money pump that was China finally runs dry.
What does all this mean for you? Well in fact, a falling Australian dollar is just the ticket. It means they’re cheaper to buy, so that when you trade in your UK pounds or US dollars, you get a lot more of them. Which in turn makes emigrating a much more economically appealing prospect!
Primed and ready to move to Australia? Then visit us at foreign currency exchange broker Pure FX for the best Australian dollar exchange rates guaranteed.