RBA Minutes were published over night which showed that there might be room for further easing. The central bank did suggest that the current interest rate of 3.25% was ‘appropriate’ but my feeling is that we have a cut round the corner. The RBA will not meet in January or February which means that is there is further movement it is likely to be in December as waiting till March could harm the economy during that period. The recent slowdown in the mining industry meant that the RBA have downgraded their GDP forecast for 2013 to less than 2.75% before climbing again in 2014 to 3%. As always it is important to consider these forecasts but at the same time it is almost impossible to predict accurately as there are so many variables which could affect the economy. My personal thoughts are that as long as China continues its investment in Australia and buying up raw materials/resources the Australian Dollar will remain relatively strong against Sterling, Euro and US Dollar.
A recent article published by the International Monetary Fund has suggested that the Australian Dollar may be used as an official reserve asset. As one of the world’s leading commodity-rich currencies this seems like a good idea at the moment as with such enormous reserves particularly in Western Australia the expansion of this particular area could keep the AUD strong. The idea behind the plan is to firm up the global banking system by having different styles of industry/commodities to support the wider global economy to avoid a future problem like the one experienced during the credit crunch of 2008.
Tomorrow the Bank of England publishes its minutes so any signs of further Quantitative Easing may cause an opportunity for Sterling to increase against the Australian Dollar so if you have a currency requirement and want to save money when buying Australians Dollars compared to using a bank feel free to contact me directly on email Tom Holian [email protected]