The Reserve Bank of Australia held their base rate of interest at 2.5% last night but stated they were still concerned about the strength of the Aussie Dollar. This is the fourth month in a row that interest rates have been left unchanged and they stated that growth has been below trend and medium-term inflation was on target, while the Australian dollar was still ‘uncomfortably high’.
With regard to foreign exchange markets, Stevens continued to show concern over the Aussie dollar’s strength.
“The Australian dollar, while below its level earlier in the year, is still uncomfortably high. A lower level of the exchange rate is likely to be needed to achieve balanced growth in the economy,” Stevens repeated.
For those of you selling the AUD to buy the pound, Euro and US Dollar this is a warning that although the Aussie Dollar has significantly weakened and there may be further declines around the corner next year. The Tones of the RBA have continued to state they want a weaker currency so those of you holding off to see the currency strengthen to levels of just a few months ago may be left extremely disappointed.
I feel it is unlikely you will see the rates move significantly in your favour and if you do need to sell the Aussie Dollar over the coming months you may be better off trading now on a forward contract to minimise your risk to the markets.
All you can do is make an educated guess as to where you feel the market will go by looking at all the information available. By next year the rate may just be 10% worse than where we are currently at.
If you are in the situation needing to move money internationally and looking for the best price – please feel free to contact the author – Ben Amrany – via the telephone number at the top of the page or via email at [email protected]