With the mining boom over and the Australian government actively seeking a weaker AUD, it would seem to me wise to sell the Aussie on dips in your favour. It is well worth remembering the AUD to used to be worth 2.5, nearly 3 for one pound. When that is considered, the move from 1.45 to 1.85 does not seem so severe.
Getting the best rate in this kind of market is all about timing and an awareness of what is actually driving the current market. I personally believe the Australian dollar is now bound to weaken further due to a slowing economy in China and a general decline in risk appetite for certain currencies affected by Chinese growth.
The Federal Reserve ‘taper’ effect as commentated on many times on this blog is also going to have a negative effect on the Aussie. As the Fed withdraws economic stimulus funds will be end up being pulled back from ‘riskier’ economies and that would include the Australian economy.
As painful as it is to make the calculation of how much your AUD was last year versus today it is very important to look at the bigger picture. The unprecedented economic circumstances of the last 5 years have given rise to the conditions that have caused the wide ranging rates seen over that period. Now as the UK economy gets back on track and interest rate hikes are mooted we should start to see more ‘normal’ rates come back into the picture.
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