Aussie dollar to plummet by 40 percent in the next 18 months
Heading overseas today, an Australian traveller would get almost $1.03 U.S. dollars for their Aussie travel money but one analyst expects this to drop by as much as 40 percent in the next 18 months.
According to Paul Gambles, managing partner at advisory firm MBMG International, the Australian dollar has overcome significant head winds over the last two years to remain above parity against the U.S. dollar but this is now due for a major correction. Mr Gambles believes that the Australian dollar will fall as low as 60 U.S. cents from the current $1.03 within the next 18 months.
"I would be surprised if the Aussie dollar is still holding above 90 - 99 U.S. cents by the year end, but once the move comes then parity to 60 handle could happen within a matter of just a few months," said Mr Gamble.
A slowdown in Chinese growth and a drop in demand for commodities globally are expected to be intertwining factors that expose the Australian dollar over the next year and a half. If this was to happen Mr Gambles believes that this could have the knock on effect of the Reserve Bank of Australia cutting interest rates further.
"Speculative, yield-seeking inflows that currently inflate the Australian dollar value by some 15 percent will not disappear but actually turn negative." said Mr Gambles of the Australian economy that has become "totally dysfunctional relying on an ephemeral boost from China."
While Australians will have to wait and see if Mr Gambles speculations come into effect. Now could be a good time to buy up foreign exchange and pre purchase that holiday travel money while great inetrest rates are still available, with pre paid travel cards such as these.
Have a question or thought? Share it with Australia's money saving community here.