The Australian dollar to US dollar interbank rate exchange rate reached 0.5530 on the 19th March 2020, a record low for the Aussie against the greenback. The market developments have been linked largely to the Coronavirus, as we see these two currencies behaving in a very ‘true to form’ manner.
For the Aussie, its status as a commodity currency whereby in terms of global and economic uncertainty it can lose value, has been realised. With Australia’s economy being so closely reliant on China, the well documented slowdown in China has caused investors to worry about Australia and demand not just from China, but also the rest of the world, in keeping the Australian economy supported.
For the US dollar, its status as a ‘safe haven’, where in times of global and economic uncertainty it can strengthen, has been realised. Financial markets have sought the safety of the US economy and investments, to shield themselves away from the what other potential dangers exist from existing investments in the world.
The current AUDUSD interbank rate is 0.6062, with 1 US dollar buying 1.6496 Australian dollars. Part of the reason for the move off the lows of 0.5530 described above is the stimulus package by the United States. This had helped to restore investors confidence in the global financial system and reversed some of the behavior on both currencies described above, which had previously led to the fresh lows being recorded.
What Can We Expect Ahead for the Australian Dollar Against the US Dollar?
The COVID-19 crisis is perhaps just beginning for the US, and one question that will be eagerly asked is what kind of responses can we expect of the measures taken so far are not enough?
One reason for the US dollar falling in value this week has been the 1.8 trillion-dollar package by the US government to shore up confidence in financial markets. This has triggered a reversal in fortunes by the US dollar, as investors have confidence to invest elsewhere. A good example is the stock market, where we have seen record gains this week.
The AUDUSD pairing is as we can see very susceptible to the Coronavirus and its economic effects, with the shift in global economic sentiment triggering key features on the behavior of these currencies.
If you have a upcoming currency transfer and would like to learn more on the factors impacting AUDEUR exchange rates, you can contact me directly, Jonathan Watson, using the form below.