How is the Australian dollar doing?
How is the Australian currency doing?
The Australian dollar is doing pretty well against inflation compared to Turkey or Argentina. However, it has seen a steady decline in its worth compared to the US dollar this past year.
The Aussie dollar isn’t the only currency weakening. In fact, since the US dollar’s worth is declining, several other currencies (like ours) are feeling the effects.
Source: Benbakkun + Bloomberg
Will the AUD improve?
Earlier this year, optimistic Westpac economists forecasted that the AUD would improve to $0.69 to 1 USD by the end of the year, hoping to see it rise to $0.75 in 2023.
Recently, they’ve updated their initial forecast to $0.65 by the end of this year, and $0.72 by the end of 2023.
“Over the remainder of 2022, there will be periods when the AUD will trade below the USD0.65 level given the high volatility in currency markets to date,” says Westpac’s 26 September 2022 report.
The AUD currently averages at $0.65 to the USD dollar.
Why is the international currency market so volatile?
It’s difficult to pinpoint one specific factor as to why the currency exchange rate looks like a rollercoaster. As mentioned above, the global pandemic and the war in Ukraine have significantly affected the global economy. Additionally, each nation’s own geopolitical situation plays a role that then trickles down to other countries.
In Australia, you have to consider the RBA cash rate hikes which have contributed to decreased lending. This is one of many things contributing to a slowdown of business and personal borrowing and means less money circulating in the economy.
The USA is facing similar issues as Australia, where fewer people are spending money and investing overseas, which impacts other global economies.
When would be a good time to send money overseas?
Now more than ever, finding international money transfer providers with low or no fees is essential in getting the biggest bang for your buck. Alternatively, you could lock in a forward contract at a rate above $0.65. However, be aware that there’s no guarantee that rates will increase to the 70 mark anytime soon.
You can begin searching for an international money transfer provider below.
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