Aussie dollar reaches six year low: Is now the right time to lock in an exchange rate?
Experts have warned travellers to brace themselves for further depreciations after the Australian dollar plunged to a six year low yesterday, trading at US69.78c.
“The Aussie is a volatile currency but the broader trend is downwards. We’ve got to US70 cents earlier than we thought, and it’s got a lot further to go,” AMP economist Shane Oliver told smh.com.au.
This result is a far cry from this time last year when the Australian dollar peaked around US94.0c and experts have tipped the dollar to fall even further against the greenback reaching US68c by the end of the year.
Oliver said the downward spiral of the Australian dollar is largely in response to concerns about China’s slowing growth and has been a common trend among other commodity-reliant economies like Canada and New Zealand.
“Commodity prices are down, global growth is soft and locally we’ve got this problem that non-mining economic activity has picked up but not enough to offset the slump in mining activity. These problems will be with us for years to come,” he said.
According to OzForex, the Australian dollar is currently trading at 70 US cents. At this rate, if you were travelling to the US with AUD$5,000 you would get $3,500. If the predictions of the currency analysts do materialise and the dollar does drop to 68c by the end of this year, this would only buy you $3,400 - that’s $100 less spending money on Fifth Avenue.
Australian jetsetters planning an end of year trip to the US could purchase a travel money card rather and lock in at least a portion of their travel money at the current exchange rate to safeguard themselves against any future drops in the dollar.
When choosing a prepaid travel card, it’s important to consider factors other than the exchange rate. Travellers should think about card fees that can easily add up over the time of your holiday including reload fees and ATM withdrawal fees.
You can compare the rates and fees of major prepaid travel card providers using Mozo’s search engine here.