As expected the Reserve Bank of Australia has cut interest rates to 3% in attempt to restrict the slowdown recently felt by the mining sector. Also, for most of the year the Australian Dollar has remained very strong against many currencies and has even been mooted as a reserve currency by the International Monetary Fund and the strong currency has had a detrimental effect on the wider economy. A rate cut usually weakens a currency but as this was had been expected we have seen little movement on Australian Dollar exchange rates.
Prices have fallen for commodities and with Chinese demand slowing recently the economy is looking to other sectors to firm up the economy. Tourism and manufacturing have also slowed down and with a strong AUD it could be argued that this is keeping both holiday makers and demand for Aussie goods and services away. Central Bank Governor Glenn Stevens commented earlier this week that the AUD remains ‘higher than might have been expected’ owing to lower export prices and a weaker global outlook.
During this month we could see some excellent buying opportunities as the markets take stock of this recent decision and with a few more data sets out this week and next we could see a small bout of AUD weakness. If you do you a currency requirement and would like to find out more information about saving money on exchange rates please feel free to contact me directly Tom Holian [email protected]