The Australian Dollar continued to strengthen against the pound in October, finishing the month at around the 2.24 levels. The decline in the global equity markets did halt the drop as they prompted further risk aversion, but this was a move short lived as risk appetite returned into the market towards the second half of the month. The core CPI figure of 2.9% (yr/yr) was right at the top of the RBA’s target rate of 2-3%, which has fuelled growing speculation that a further rate hike may be necessary when the RBA meet on the 6th November. It is also worth noting that this month the $AUD hit an all time high against the $USD, indicating that it is strong across the board, and not just against the £ Sterling.
An increase in interest rates would make it an even more attractive target for foreign investment, and with commodity prices soaring (especially Gold which reached a 28 year high), the Australian economy is booming.
The range throughout October has been about 8 cents, with a high of 2.32 and a low of 2.24, so if you wee taking £100,000 across this would equate to $8000! If you then go back a couple of months to mid August, the rate was 2.56, a massive 32 cents or $32,000 difference on £100,000!
The question is how low can it go? The simple answer is nobody can predict these moves, but there are steps you can take to protect yourself against these currency fluctuations and eliminate the risk of the markets moving against you. When migrating, it is paramount to ensure you are aware of these market movements and any significant trends developing, because the transfer of your funds from £ to $AUD will have a massive impact on your future wealth.
So how can you protect yourselves against such volatility? At HIFX you can fix a rate of exchange with just a 10% deposit. You then set a date for up to 2 years in the future to send the remainder of your funds, which are all paid at the pre agreed rate of exchange. This is known as a forward contract, or a buy now, pay later option, and eliminates any risk of the market moving against you and means that you know exactly how many Aussie Dollars you will have to start your new life abroad. It can be done for all, or a portion of your funds, depending on what you have available to you.
Should you be in the fortunate position to have all or the majority of your funds available to you, then you can always buy your AUD on a spot contract, or buy now, pay now basis. As it sounds, you buy your currency now, and pay for it now, and we will then send your funds to an account of your choice in Australia (if you do not have an account set up then we can assist with this as well). Again you have peace of mind in the knowledge that you are protecting yourself against any currency fluctuations, but you are also taking advantage of the high interest rates down in Oz.
Many people will think about leaving their funds in the UK, as they may be renting for 6 or 12 months. However, 6 months ago it was around 2.40 and 12 months ago it was around 2.50, so the question you need to ask yourselves is what risk am I willing to take, or how much can I afford to lose?
Whatever the outcome, the most important thing is to start following the markets and speaking to the experts. Whether you are a week, a month, or a year from emigrating, forward planning will make your move a lot easier and more stress-free.
I hope this helps, but should you have any questions then please do not hesitate to contact us.
