What Biden’s US election win means for your international money transfer
Exchange rates are looking favourable for Australians sending money overseas as the Aussie dollar rose off the back of US election results.
Right now, the AUD is trading just below 73 US cents, according to the XE Currency Converter - up from around 71 US cents at the start of election week.
This is the first time since mid-September that the currency has broken past 72.5 US cents.
While the gap between US$0.71 and US$0.73 seems almost negligible, for larger international money transfers (IMT), this could be a difference of hundreds of dollars.
IMT provider OFX’s senior corporate manager, Matt Richardson said Joe Biden winning the presidency boosted the market appetite for risk (known as ‘risk on’ sentiment). As a result, investors flocked to purchase stocks and high-yield currencies like the AUD, raising the value of these riskier assets.
“The democrat led government is expected to implement significant Coronavirus relief programs and alleviate tensions with key global allies, creating a ‘risk on’ environment across financial markets,” Richardson said.
“The Australian dollar has advanced against a basket of major counterparts in the midst of [this] ‘risk on’ move, creating an opportune time for those settling costs overseas to reduce the AUD expenditure or maximise their foreign currency return.
“Conversely those sending funds back down under [would] suffer a higher cost or smaller return on the back to the AUD appreciation.”
In other words, bigger savings are now on the table for individuals and businesses sending funds from Australia to countries like the US and the UK, thanks to stronger AUD/USD and AUD/GBP exchange rates.
But you may lose out if instead you’re moving money from the US and UK to Australia.
AUD uncertainty ahead
While the US election is behind us, a couple of events could still jeopardise the Aussie dollar’s gains over the past week, said Richardson.
One is if US President Donald Trump decides to contest the election results. As Richardson explains, “a contest result could foster greater uncertainty through the next 70 odd days”.
“President Trump still holds the office until January 20 and anything short of a concession creates the possibility of a prompt correction in the broad risk narrative and hampers further gains across financial markets,” he said.
With uncertainty in the air, investors could switch gears to risk aversion and withdraw their money from shares and high-yield currencies like the AUD, pushing the prices of these assets back down.
Richardson added that current COVID-19 lockdowns across Europe could also prompt the AUD to move one way or the other.
“If these lockdown measures have the desired impact and ease the burden on the hospital network, allowing a reopening, the AUD should enjoy another run of gains,” he said.
“If however further and extended measures are required, the AUD could come under short term pressure.”
How to save bigger on your money transfer
For now though, the Aussie dollar is holding strong, allowing those sending money from Australia to reap the benefits of more competitive mid-market exchange rates.
That said, you’ll still need to shop around to find the cheapest international money transfer deals, as all banks and IMT providers will offer different rates.
For instance, while transferring with your bank can be more convenient, they may not be your best bet cost-wise, as they often charge higher markups (on top of the mid-market rate) than specialist providers like OFX, WorldFirst and TorFX.
Not convinced? Mozo’s number crunch shows that sending AU$5,000 to the US with today’s average IMT specialist exchange rate could save you US$144, as opposed to today's average Big 4 Bank rate!
So if you’re eager to land better exchange rates than the banks, start your search with these offers from specialist money transfer providers.
I want to transfer
Today’s foreign exchange rates
- Excellent exchange rates, no transfer fees
- 24/7 transfers online or over the phone
- Personal account management and expert insights
- Only available to Business & eCommerce customers
- Same-day transfers to most countries
- ASIC regulated & trading since 2004
- Safe, secure, and trusted
- Enjoy great rates, fee-free transfers, and lightning-fast payments right around the clock.
- It’s simple, quick, and a lot cheaper than your bank.
- Bonus $50 credit on your first transaction and zero fees with InstaReM, use code MOZO50 (ends Dec 31, 2021)
- Zero fees on first transaction until 31st Dec 2021
- Transact online 24/7 with fast settlement and extremely competitive rates
^See information about the Mozo Experts Choice International Money Transfer Awards
Mozo provides general product information. We don't consider your personal objectives, financial situation or needs and we aren't recommending any specific product to you. You should make your own decision after reading the PDS or offer documentation, or seeking independent advice.
While we pride ourselves on covering a wide range of products, we don't cover every product in the market. If you decide to apply for a product through our website, you will be dealing directly with the provider of that product and not with Mozo.