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The great £ verses $ debate

The great £ verses $ debate

Old Feb 4th 2008, 1:29 pm
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Default Re: ozzy$

Originally Posted by spartacus
As Sprite was saying, these anticipated interest rate changes are factored into the echange rates markets already. Very often i've noticed an actual Oz interest rate increase results in downward pressure on the dollar.

That's interesting Spartacus, I had a look at the GBP:AUD chart for the last year, and marked on it the increases/decreases in UK interest rates, and the increases in the Aus interest rates. I have the chart, but don't know if I can post an image.

Both the increases in Aus interest rates were followed by strengthening of GBP against the AUD:
  • 8th Aug 07 - Australia increases rate from 6.25% to 6.5%; GBP:AUD increases from £1:A$2.36 on the 7th August to £1:A$2.52 on the 17th August;
  • 7th Nov 07 - Australia increases rate from 6.5% to 6.75% ; GBP:AUD increases from £1:A$2.26 on the 6th November to £1:A$2.36 on the 22nd November
I know that there are a lot of other factors which influence exchange rate, but i always understood interest rates to be the most significant. Hmmm - could be an interesting week!

Thanks to @boy for the link to DailyReckoning - hadn't seen this before.

SG
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Old Oct 13th 2008, 8:13 pm
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Default Re: ozzy$

Originally Posted by MikeStanton
Jan 2008 : Not an economist, but I know a reasonable amount about economics (MBA). I predicted the exchange rate would stay at ~2.1-2.2.
After the dust settles - next 6 months or so - my best guess is UK:Oz exchange rate may climb slightly to 2.2-2.3
Just shows how hard it is to see where things are going in these wild times !
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Old Sep 24th 2009, 11:14 pm
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Default Re: ozzy$

Originally Posted by MikeStanton
Not an economist, but I know a reasonable amount about economics (MBA). I predicted the exchange rate would stay at ~2.1-2.2. However, contrary to what a lot of economists were saying earlier, Oz is now likely to take a big hit from the now very probable US recession - proof of this is that the Oz stock exchange has been in free fall over the past few days. Difficult to know if this is irrational sentiment or not. Anyhow, what it does point to is: i) Oz interest rates may not rise so quickly, otherwise the Oz economy may stall very quickly and ii) the big commodities boom in Oz ain't going to be enough to protect them.

So the impact of all this? After the dust settles - next 6 months or so - my best guess is UK:Oz exchange rate may climb slightly to 2.2-2.3
6 months on, it went exactly (and continuously) the other way, down to 1.85 !

It's interesting to reflect back on these past posts regarding the exchange rate just to see how amazingly unpredictable the whole thing is.
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Old Sep 26th 2009, 9:52 am
  #34  
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Default The great £ verses $ debate

Shame to hear that people like Sooty and others have been forced to delay. Probably sensible if you had budgeted tightly on a previous and higher rate. But if you are still fluid with some cash after costs and setup then really not the end of the line. Guess it really depends on the main drivers to move in the first place, be they push factors or pull factors.

As for waiting until things to get better, well, only hindesight will tell. My feeling is Aus and UK have reached a new and refreshing parting. Far too long has Aus been seen as a smaller fish in the global pond, but thankfully, as we can see from today's events in the US, no longer. It sits well and truly on the world stage. Not only that, it is closely linked to what many are now seeing as the new global powers, those from the East. The West has had it's run, but it seems times are a changing. HSBC has just relocated it's senior staff away from London and back to the East. That is a major statement of intent about power shifting from the worlds largest bank. Australia has been nurturing those economies since the late 90's. I also think the trade value between Aus and Uk has changed massively now, which will impact greatly (as part the usual 3 indicators to currency rates) on the new level between the two rates.

My feeling is that the AUS $ will remain a stronger currency for quite a long time now. The £ has had it's day. Perhaps in part artificially held up by the lucrative tax breaks offered by the Inland Revenue to foreign companies basing themselves in the UK for tax domicile. Other countries can play that game too so once the board rules level out what remains are the chips. What do you have that others want? For the most part the UK has exported pharmaceuticles and cars. And we all have read enough about the UK car industry lately. So what does the UK have the other countries want? Can't rely on oil much any more, that's for sure. I know people are over stating it, but Aus really is the worlds largest sand pit full of gems, metals and fuel of all types. It will exploit it for as long as it can as this really is a gravy train not to be missed.

The country does offer a great deal in terms of a standard of living, not just one to be used as a jumping stone to capital gains when shifting money. If you want to do that pick somewhere in the developing world. I think people should still come over. You asked a country to give you a chance, so prove yourself to it.

Good luck to everyone though.
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Old Sep 26th 2009, 10:31 am
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Default Re: The great £ verses $ debate

Excellent post. Well reasoned. I agree with your thoughts on the medium term GBP to AUD. With interest rates rumored to rise in Australia before the end of the year this will continue to make the AUD an attractive currency.

Interestingly todays news contained articles about the prospect of near parity for the AUD with the USD towards the middle of 2010.

The biggest change the world now faces imo is the shift in power from west to east and that is something which Australia is primed to benefit from.
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Old Sep 26th 2009, 12:57 pm
  #36  
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Default Re: ozzy$

yeah *** it eh, rewind back 11 months to nearly 2.7
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Old Sep 26th 2009, 8:49 pm
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Default Re: The great £ verses $ debate

Originally Posted by Centurion

Interestingly todays news contained articles about the prospect of near parity for the AUD with the USD towards the middle of 2010.
As much as I would like to see that, and parity with the pound ....

Seriously the "AUD will reach parity with the USD" comment seems to be driven by aussie ego as much as anything. Its a comment they whirl out everytime the aussie dollar starts to rise. I especially view it with caution after 2008 when it was churned out almost daily, parity with USD by end of 08, instead it dropped rapidly about 25%.


Who knows, however I will keep my for the aussie to get its ego up with any currency it wants, especially Canadian, USD and GBP.
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Old Sep 26th 2009, 9:05 pm
  #38  
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Default Re: The great £ verses $ debate

Originally Posted by Max&Ozzy
Shame to hear that people like Sooty and others have been forced to delay. Probably sensible if you had budgeted tightly on a previous and higher rate. But if you are still fluid with some cash after costs and setup then really not the end of the line. Guess it really depends on the main drivers to move in the first place, be they push factors or pull factors.

As for waiting until things to get better, well, only hindesight will tell. My feeling is Aus and UK have reached a new and refreshing parting. Far too long has Aus been seen as a smaller fish in the global pond, but thankfully, as we can see from today's events in the US, no longer. It sits well and truly on the world stage. Not only that, it is closely linked to what many are now seeing as the new global powers, those from the East. The West has had it's run, but it seems times are a changing. HSBC has just relocated it's senior staff away from London and back to the East. That is a major statement of intent about power shifting from the worlds largest bank. Australia has been nurturing those economies since the late 90's. I also think the trade value between Aus and Uk has changed massively now, which will impact greatly (as part the usual 3 indicators to currency rates) on the new level between the two rates.

My feeling is that the AUS $ will remain a stronger currency for quite a long time now. The £ has had it's day. Perhaps in part artificially held up by the lucrative tax breaks offered by the Inland Revenue to foreign companies basing themselves in the UK for tax domicile. Other countries can play that game too so once the board rules level out what remains are the chips. What do you have that others want? For the most part the UK has exported pharmaceuticles and cars. And we all have read enough about the UK car industry lately. So what does the UK have the other countries want? Can't rely on oil much any more, that's for sure. I know people are over stating it, but Aus really is the worlds largest sand pit full of gems, metals and fuel of all types. It will exploit it for as long as it can as this really is a gravy train not to be missed.

The country does offer a great deal in terms of a standard of living, not just one to be used as a jumping stone to capital gains when shifting money. If you want to do that pick somewhere in the developing world. I think people should still come over. You asked a country to give you a chance, so prove yourself to it.

Good luck to everyone though.
Rarely does one read such complete codswallop. So really well done on comprising a piece completely unfounded on anything that traditionalists might like to call .....facts.
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Old Sep 26th 2009, 9:17 pm
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Default Re: The great £ verses $ debate

Love it.... two guys read the same post and one says....

Originally Posted by Centurion
Excellent post. Well reasoned.
...and the other says.

Originally Posted by MartinH
Rarely does one read such complete codswallop.
Is it any wonder we have the occasional bust up on here.
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Old Sep 26th 2009, 9:44 pm
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Default Re: The great £ verses $ debate

Originally Posted by jad n rich
As much as I would like to see that, and parity with the pound ....

Seriously the "AUD will reach parity with the USD" comment seems to be driven by aussie ego as much as anything. Its a comment they whirl out everytime the aussie dollar starts to rise. I especially view it with caution after 2008 when it was churned out almost daily, parity with USD by end of 08, instead it dropped rapidly about 25%.


Who knows, however I will keep my for the aussie to get its ego up with any currency it wants, especially Canadian, USD and GBP.
But the AUD effectively reached parity with the USD a couple of times during 2008. The big drop was caused by panic around the GFC and now the panic is over the $ is heading back to parity. (Not that parity means anything in economic terms. Although it does provide some good buying opportunities.)

I think most people are joking about parity with the pound. I don't think it's meant to be taken seriously.
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Old Sep 26th 2009, 9:55 pm
  #41  
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Default Re: The great £ verses $ debate

Originally Posted by MartinLuther
But the AUD effectively reached parity with the USD a couple of times during 2008. The big drop was caused by panic around the GFC and now the panic is over the $ is heading back to parity. (Not that parity means anything in economic terms. Although it does provide some good buying opportunities.)

I think most people are joking about parity with the pound. I don't think it's meant to be taken seriously.
Echoes my thoughts exactly.
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Old Sep 26th 2009, 10:50 pm
  #42  
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Default Re: ozzy$

Originally Posted by DownUnderPaddy
6 months on, it went exactly (and continuously) the other way, down to 1.85 !

It's interesting to reflect back on these past posts regarding the exchange rate just to see how amazingly unpredictable the whole thing is.
Well mike Stanton always was full of S**T .................mm
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Old Sep 27th 2009, 2:57 am
  #43  
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Default Re: ozzy$

Just shows what economists know, absolutely diddely squat
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Old Sep 27th 2009, 10:23 am
  #44  
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Default Re: The great £ verses $ debate

Threads merged.
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Old Sep 28th 2009, 5:01 am
  #45  
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Default Re: ozzy$

Originally Posted by JPSUPERHOOPER
hi

any economists about to add any input re the AUS$.
as far as i can see the last few weeks it has been in freefall.
any coments?
1.5 does not sound so far away
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