A warning from the RBA

The Australian dollar has been the fourth best performing currency out of the top 10 most traded currencies and is 10.2% stonger on average against all of the major currencies since that start of the year. However Governor of the Reserve Bank of Australia announced last week that he believes the Australian dollar is overvalued and it’s only a matter of time until this starts to have a negative impact on the Australian economy. The Governor beleieves  GDP growth, inflation could start to fall and jobs might be at risk.

Friday morning the Reserve Bank of Australia released their latest monetary policy statement and the central bank reacted to the overvalued Australian dollar by cutting growth forecasts up until the end of the year by 0.5%. However the Reserve Bank of Australia announced that they are optimistic that economic growth would recover over the next 12 months as long as the currency did not continue to strengthen further.

For clients that are selling Australian dollars to buy pounds, I don’t believe the RBA are in the position to cut interest rates in a bid to devalue the Australian dollar however I expect at any opportunity the Governor of the RBA will talk down the currency in a bid to devalue it, a common practice known as jawboning. As exchange rates have improved 10 cents since the start of June and with such an uncertain time ahead this spike in the market may be worth taking advantage of.

If you are trading GBPAUD this week, month or year I would recommend emailing me with the the reason for the transfer (company goods, property purchase) and your timescales and I will response with the options available to you drl@currencies.co.uk. Alternatively if you would like to discuss your requirements over the phone call 01494-787478 and ask to be put through to Dayle Littlejohn.

** If you are already using a brokerage and would like to know if you are receiving the best rates possible email me with the exact figures and I will reply with our live price. This will take you a few minutes and in the past I have saved clients thousands! **

For more news on foreign exchange rates and to request a free no-obligation quote visit www.currencies.co.uk