Aussie Dollar Update for November
Dec 3rd 2007, 9:05 am
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Aussie Dollar Update for November
John Howard’s 11 year reign as Prime Minister may have ended with the election of Labours Kevin Rudd, but the most influential data when it comes to the outlook of the Australian Dollar has been the uncertainty in the global equity markets. There was better news in November for all those of you looking at buying Australian Dollars, as increased risk aversion crept back into the market thus weakening the AUD.
The moves have come despite the RBA raising the interest rates to 6.75% earlier in the month, but this was a widely anticipated move and so did not have a huge impact on the market. The Aussie Dollar peaked at over 2.38 against the £ this month, which was welcome news after starting the month at around the 2.24 levels. Putting this into perspective, that is a difference of $14,000 if you were moving £100,000!
Investors have been selling their dollars and realising their profits in this period of volatility, hence the dollar has got weaker. However, the moves continue to be erratic, exaggerated and impossible to predict, so those with funds available to them may choose to take advantage of these gains and buy some or all of their currency by way of a spot deal (buy now pay now) or forward contract (buy now, pay later). Both are risk free strategies as you know from the outset exactly how many dollars you will receive.
Another option available is a market order. This is simply where the client agrees a rate they would like to achieve and gives instructions to buy if and when this level is hit. It is a good way of hitting the peaks in the market, although bear in mind it isn’t a risk free strategy and there is no guarantee that your ideal rate will be realised – the market can easily move back down as quickly as it has come up.
The market hit 2.2180 last month, and many people were hoping for a rate of 2.30. We went through this level and those clients are now hoping for 2.40! However, the market dropped back down to about 2.32 by the end of the month, so the question is when do you decide to buy? If you set yourself targets, and keep moving these targets, then it becomes an extremely risky strategy in light of the volatile climate we are currently in. We are seeing daily moves of 3 to 4 cents, which a year or even 6 months ago would have turned heads but now is seen as general practice.
The important thing is forward planning, like with all aspects of your migration – speak to the experts and set yourself a strategy that is both realistic and one you are happy with. There is no bad time to be thinking about the foreign exchange aspect of your move and the options available to you as the rate you get will have the biggest impact on your new life Downunder.
I hope this helps but if you do have any quesitons then please get in touch.
Kind regards.
Richard, HiFX.
The moves have come despite the RBA raising the interest rates to 6.75% earlier in the month, but this was a widely anticipated move and so did not have a huge impact on the market. The Aussie Dollar peaked at over 2.38 against the £ this month, which was welcome news after starting the month at around the 2.24 levels. Putting this into perspective, that is a difference of $14,000 if you were moving £100,000!
Investors have been selling their dollars and realising their profits in this period of volatility, hence the dollar has got weaker. However, the moves continue to be erratic, exaggerated and impossible to predict, so those with funds available to them may choose to take advantage of these gains and buy some or all of their currency by way of a spot deal (buy now pay now) or forward contract (buy now, pay later). Both are risk free strategies as you know from the outset exactly how many dollars you will receive.
Another option available is a market order. This is simply where the client agrees a rate they would like to achieve and gives instructions to buy if and when this level is hit. It is a good way of hitting the peaks in the market, although bear in mind it isn’t a risk free strategy and there is no guarantee that your ideal rate will be realised – the market can easily move back down as quickly as it has come up.
The market hit 2.2180 last month, and many people were hoping for a rate of 2.30. We went through this level and those clients are now hoping for 2.40! However, the market dropped back down to about 2.32 by the end of the month, so the question is when do you decide to buy? If you set yourself targets, and keep moving these targets, then it becomes an extremely risky strategy in light of the volatile climate we are currently in. We are seeing daily moves of 3 to 4 cents, which a year or even 6 months ago would have turned heads but now is seen as general practice.
The important thing is forward planning, like with all aspects of your migration – speak to the experts and set yourself a strategy that is both realistic and one you are happy with. There is no bad time to be thinking about the foreign exchange aspect of your move and the options available to you as the rate you get will have the biggest impact on your new life Downunder.
I hope this helps but if you do have any quesitons then please get in touch.
Kind regards.
Richard, HiFX.
