Australian Dollar to Fall Further? (Tom Holian)

Australian Dollar to Pound Rate Continues to Remain in Monthly Range

The Reserve Bank of Australia has confirmed this week that it will keep rates steady at a record low of 2.5% but has also suggested that it wants the Australian Dollar to fall further. RBA Governor Glenn Stevens has said that the Dollar ‘remains high by historical standards’ and the movement during 2013 ‘will assist in achieving balanced growth in the economy.’ With the Aussie Dollar still high relative to its trading history this is likely to have a detrimental effect on the economy if the exchange rates stay as they are.

The RBA did say in their meeting this week that they are looking for stability concerning their interest rates so a cut is off the agenda at least in the short term. Therefore, it could be argued that they have other ideas in order to weaken the currency in the longer term. We have seen a small improvement for the Australian Dollar overnight with better than expected Aussie GDP data for the final quarter of 2013.

With 8 interest rate cuts over the last 2 years in an effort to stimulate the Australian economy and help the non-mining sector we saw the last rate cut in August 2013. However, since then even with the absence of a change in interest rates we have seen GBPAUD rates move by as much as 25 cents during this period.

Today the Bank of England meet to discuss interest rates and the ECB is due to meet at 1245pm. It is unlikely that we’ll see either bank make any change to policy but some pressure has been lumped on the ECB recently as EU inflation remains worringly low.

If you have a currency transfer to make and want to save money when buying or selling Australian Dollars then contact me directly Tom Holian [email protected]