Currency wars

Hugh Dive

Over the last month, we have seen the AUD fall 8% vs. the USD, continuing the volatility in the AUD in 2016 which started the year off at 0.72, then fell to 0.68 mid-January before recovering to over 0.78 in mid-April. Research that was released on Wednesday from ANZ Bank’s foreign exchange strategy team stating that the AUD was overvalued, and could head towards US50¢ as it loses its de facto safe-haven status. In the press, large movements in the Australian dollar are often erroneously presented in the press as a vote of confidence in Australia as a nation or the management of our elected leaders. A falling Australian dollar is often viewed as a negative event, raising the cost of online purchases, imported cars, and overseas travel. In this week’s piece, we are going to look at the AUD and in particular the winners and losers from currency movements.


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