Australian Prime Minister Julia Gillard has seen a reversal of fortune today and with confidence dwindling she has decided to step down as leader of Australia’s Labor Party. previous PM Kevin Rudd has now taken over the mantle and won by 57 votes to 45 against Gillard. This has provided a strengthening to the Australian Dollar which has seen a free fall against Sterling over the last two months. Today we have seen the GBPAUD exchange rate drop by over 1%. Typically if a country has political instability this would weaken the currency involved but for me with Gillard facing pressure for quite some time this has change of leadership has given confidence back to the country.
I feel however that this currency move is rather short term and we could be seeing the market try to rally back towards 1.70 once this issue has passed. Since March Sterling has improved against the Aussie by over 20 cents and the rates for buying Australian Dollars with Sterling earlier this month hit the highest level since September 2010. There is a strong possibility that the RBA will cut interest rates later this year to weaken the AUD which in turn could help the Australian export market which has struggled to remain competitive in light of such a strong Dollar. If you are thinking of selling Australian Dollars and want to take advantage of current rates you may wish to think about buying a forward contract which means that for a small deposit you can secure your currency in advance.
If you would like more information about how to save money when buying or selling currency please feel free to send me an email Tom Holian [email protected]