The strength of the Australian dollar continues to evoke some surprise
The strength of the Australian dollar continues to evoke some surprise. Despite the RBA cutting rates for the past two years, despite the RBA governor's jawboning and despite commodity prices declining, it's stayed stubbornly in the mid-90 US cents. Australia's economy might not be at full throttle but for the past six years it's been running a lot faster than most other economies. Our debt is lower (and more highly rated) and there are signs that Australian businesses are using this dollar-discipline to improve productivity. The value of Australia's currency is staying high because we're - in relative terms - a low debt country and a safer bet than most. Investors should think about that principle with all the assets they buy. Companies with predictable cashflows and money in the bank tend to hold their value when times are tough and outperform when growth improves.
The Perpetual Equity Investment Company Limited is an ASX listed investment company offering investors access to a portfolio of predominantly high quality Australian and global listed securities, selected by Perpetual Investment Management Limited.