Will the Oz dollar fall ?

[odaat]

Would you consider the Oz dollar at risk of falling ?
my personal take on the situation relates to a $70K property loan to pay off.

I am paid in sterling and I want to trf. monies over to clear the debt in 2005 as one of my top priorities. The best time would be when the Oz dollar is flat .... when does the board think that could be ?
odaat

 

[Ausprop]

I would be making the most of the recent dip - I think the Aussie will continue to rise as the US$ comes under continuing pressure

 

[XBenX]

If you look at it from an academic perspective (and assume perfect mobility of capital) its easy to work out (we could even draw some funky graphs to make you feel good about your decision)

Unfortunately its not that easy (when is it ever)

Currency speculation is called speculation for a reason =)

Look at the stability of monetary policy in both countries / mobility of capital / risk of one off events... etc etc etc

Good luck!

 

[Nobleone]

I agree with Ausprop...

Nobleone

 

[quiggles]

The question is (as I understand it) AUD vs pund sterling, not v $US. The $US has falllen against all currencies except thsoe being supported against it. There are new signs that the Australian economy is weakening, leading to a steady as she goes interest rate environement. Other things being equal, I'd expect a softening of the AUD. Britain (I think) is doing pretty OK, so you'd hope if you had quids that yo'd see some appreciation.

It would be good to know what Pitt St thinks on this one.

 

[Ausprop]

good point quiggles! if this is anything to go by we should all be emigrating anyway.... http://afr.com/articles/2004/12/03/1101923320262.html

 

[Ausprop]

http://www.brw.com.au/freearticle.aspx?relId=11071

actually can I change my mind??

 

[Highlander_0000]

I'm with you Quiggles. With a fairly large investment in US property and another tranche in next month, I pretty much have to be!

Highlander

 

[Sunfish]

http://www.brw.com.au/freearticle.aspx?relId=11071

actually can I change my mind??

Ausprop (you didn't really play Rugby for Oz did you?) read the second report more carefully. There is nothing in it to inspire confidence.

One says "The reason for the weak US dollar is well known: an entrenched current account deficit of 5.7% and rising" (that would be WRT GDP) while the other says "This week, the current account deficit reached $13.7 billion, or 6.5 per cent of GDP - just shy of the point at which former treasurer Paul Keating made his banana republic comments of the mid-1980s."

I can assure you the US economic newsletter writers are screaming about their figure.

I also read that the American broad money supply is increasing @ 4.8% pa (ie They are printing lots of money) while ours is increasing @ a mere 9.4% (figs from memory but close)

Can't remember figures but our rates of personal debt much higher (possibly near double) than the yanks too.

Thommo.

 

[Highlander_0000]

would be nice to own the printing press!

 

[quiggles]

Hmm...droit de seigneurage?

(Sorry, a rude currency joke).

 

[Aceyducey]

Of course the AU dollar will fall!

What's the timeframe again..

I wouldn't expect too much flatness in '05.

What's been the average percentage movement in the Australian dollar in a year over the last 10 years again?

Odaat, you can't control - or predict - currency movements in a short timeframe, just as it's hard to predict property or share price movements in a short timeframe. In a longer time frame you can be more accurate.

Thus, it's not worth worrying about. The important thing is understanding the reasonable worst case & ensuring you have the mechanisms in place to manage it (or don't leap in if there's a reasonable shot of you losing out).

Cheers,

Aceyducey