Luke Brown

Just seen that the rates gone down to 2.11 dollars to the pound. Grrrr.... If it keeps going down things will start seeming a lot more expensive!

paul76

There is a few threads on this Luke so i dont think anyone will reply.

Not having a dig mate, just saying it how it is.

NikiL

Hi Luke,

There has been quite a bit of discussion on this in the Australia forum over the last couple of days. Bottom line, if you're earning $ and spending $ it doesn't make any difference. If you're exchanging, well, you know what drives exchange rates so you know what its likely to do in the future.......

Hope you've got the answers you were after before,
Niki

cartmeover

Ermm "If you're exchanging, well, you know what drives exchange rates so you know what its likely to do in the future......."
Its all a mystery to me....Go up or down??? don't say both, got 25k to exchange shortly

bcworld

There are no fundamental reasons for the rate to improve for you....there are for it to get worse though. However the markets are a law unto themselves so no-one can tell you what will actually happen.

cartmeover

So basically whilst the Australian economy booms and strong growth in the commodities shows no sign of let up, and the AUD will trading well on Sterling -the place to be is OZ, so I'll exchange now and get over there

NikiL

Luke's an accountant who sat the same exams as me, hence my reply!

Its driven a lot by interest rates, so IMHO pretty unlikely to improve any time soon unless the markets have a big upset unrelated to rates.

cartmeover

I'm sorry Niki/Luke I was being flippant....
Alan Greenspan famously said that he hadn't seen a forecast methodology for exchange rates that outperformed a coin toss," So when someone asked, 'Is the Australian dollar going up or down?' the answer is yes, and flip a coin to find out which way it's going." but I'll bow to your accountancy knowledge.

NikiL

No bowing required, it'll only give you back ache

Theres a basic (and it is basic) economic theory that says a country with higher interest rates attracts overseas investors as they will get a higher return on their funds. Because more people want to buy the currency to invest and get the higher return the currency becomes more attractive, more people want to buy it, so the rate worsens. Because Australias interest rate is higher than the UK's that makes it more attractive, and the rate worsens.

Its the unknown stuff that blows it out of the water, major economic disasters etc that move rates away from the theory.

ps. My boss said to me a few years ago that once you've finished your exams its amazing how much you forget in a short space of time - he is sooo right

bcworld

This is very true.....traditionally the A$ gets sold off in times of turmoil, it's not seen as defensive.....or hasn't been...maybe it is now? People often talk about A$3 to the pound.....but I think this only ever happened on one day in the aftermath of Sept 11th. It didn't stay up in the $2.90s long either.

cartmeover

Thanks Niki, passed mine at Glamorgan many many moons ago but got into IT in the the late eighty's so personally I've forgotten the lot.

spartacus

Yep. Pounds seen as a safe haven in times of turmoil. Rate went from mid 2.30 to mid 2.50 in a day couple of months back when the extent of the problems in the US became apparent and stock exchange dropped.

renth

I just sent some cash over and guess what rate I got?

2.0967

Stephen

The real exchange rate you should be watching is the

Aussie V The Greenback

For Bristsh and Irish Expats to be, exchanging at a good rate nornmally depends on how well or badly the aussie is doing against the US dollar.

If the Aussie is doing well against the Dollar (Which it is doing recently) then the Pound/Euro rate you get against the aussie will be depressed.

If the US Dollar strengthens against the Aussie then by and large your Euro & Pound will get more against the Aussie.

There are minor complications involved but more or less the above is a good rule of thumb.

So, in short watch, the trend in the Aussie v The USD. From that you will see which way the AUssie v UK/Euro rate is going.

My outlook? The Aussie will gain parity against the USD within 12 months sending the sterling rate against the Aussie well below the AUD$2.00 rate. Say 1.80-2.00 for your pound.

This isnt my advice just my guess based on watching the markets for three years and working in finances for 10.

Do your own research, as usual.


PS Meant to add- Why is the US Dollar weak? It's the million dollar question. Quite clearly the US economy is in trouble and has been for a while. Having a weak dollar as part of US Policy obviously will encourage exports and go some way to tighten the trade deficit. That being the case the US have already allowed the dollar to weaken and will continue to do so for the foreseeable future. In short this will mean strong booming economies like the Australian economy will see their currency appreciate considerable against the USD. Unless the skills shortage in Australia gets completely unsustainable and the workforce cant service the economy, I dont see any let down in this currency swing for years to come.

Sooty and Sweep

1994 to present day, quite a ride? Where it will be four years from now is anyones guess?