legoman Posted September 9, 2010 Share Posted September 9, 2010 why is the exchange rate plummeting again. its like a roller coaster :arghh: if I leave my money here I get nowt, if i put it in oz poor exchange tho higher interest seems no matter which way i go i gonna get :Randy-git: Link to comment Share on other sites More sharing options...
Guest John from Moneycorp Posted September 9, 2010 Share Posted September 9, 2010 In summary, as has been noted, the GBP/AUD has been dropping, fairly considerably. Reasons why? From the Australian dollar perspective, there has been an re-emergence of the stock market strength and when this happens, this encourages risk and investors buy into high yielding currencies such as the Aussie dollar. Overnight, there was some positive information regarding employment in Australia, which strengthened the Aussie. Also, recently, there has been negative information in relation to sterling (£), namely poor UK economic data (there has been poor manufacturing/construction data released, plus worries over the UK housing market). Link to comment Share on other sites More sharing options...
legoman Posted September 9, 2010 Author Share Posted September 9, 2010 certainly doesnt look like improving for a long while :cry: Link to comment Share on other sites More sharing options...
Guest snowy10 Posted September 9, 2010 Share Posted September 9, 2010 I've just been looking at historical data for the Aus $ v £ and have averaged the data for the years I looked at, the results: '05 = 2.38 '06 = 2.44 '07 = 2.38 '08 = 2.18 '09 = 1.98 '10 (to date) = 1.70 Taking the last 6 years and averaging them you get a rate of 2.17, when does anyone think it may get even close to this rate again?????? Thanks. Link to comment Share on other sites More sharing options...
Guest girlwizz99 Posted September 9, 2010 Share Posted September 9, 2010 I've just been looking at historical data for the Aus $ v £ and have averaged the data for the years I looked at, the results: '05 = 2.38 '06 = 2.44 '07 = 2.38 '08 = 2.18 '09 = 1.98 '10 (to date) = 1.70 Taking the last 6 years and averaging them you get a rate of 2.17, when does anyone think it may get even close to this rate again?????? Thanks. I expect you are looking at a couple of years before we see 2 again. Interest rates are expected to start rising in the UK in 2011 and as the credit crisis eases itself of the bank's balance sheets in the UK we will see inflation increase triggering more interest rate rises. Conversely all it takes is a little negative news from the Chinese economy to knock down the Aussie dollar.......... Link to comment Share on other sites More sharing options...
legoman Posted September 9, 2010 Author Share Posted September 9, 2010 does tend to make me wonder if i should wait til next year now. its a lot of money to poss sacrifice Link to comment Share on other sites More sharing options...
Guest girlwizz99 Posted September 10, 2010 Share Posted September 10, 2010 does tend to make me wonder if i should wait til next year now. its a lot of money to poss sacrifice I would definitely wait. You can get 2.5% in the UK banks in interest or why not look at some of the high yielding dividend stocks in the FTSE if you can cope with a bit more risk - Aviva (6.5%) , Vodafone (7%) etc.... Don't forget the GBP is exactly where the government wants it to be. It is this low so England can export more, import less and encourage people to spend cash at home. Once inflation kicks in - which it will in the next couple of years, interest rates will rise - hence so will the GBP/AUD cross rate. Link to comment Share on other sites More sharing options...
fleabo Posted September 10, 2010 Share Posted September 10, 2010 does tend to make me wonder if i should wait til next year now. its a lot of money to poss sacrifice Next year it might be $1.50 to the pound! Link to comment Share on other sites More sharing options...
Guest girlwizz99 Posted September 10, 2010 Share Posted September 10, 2010 Next year it might be $1.50 to the pound! It could be... but I believe there is a lot more upside potential than down... Link to comment Share on other sites More sharing options...
Guest cantiki Posted September 10, 2010 Share Posted September 10, 2010 Bank of England boss Merv King and his jolly honchos on the Monetary Policy Commitee are aggresively talking down the pound. Look at any positive UK economic news and this mob rush in to point out that it is only temporary and everything is going to return to doom and gloom very soon. Why? To make UK produced goods comparatively cheaper abroad in the hope that a national economic recovery can be export led. Is it working? If last months record trade deficit is anything to go by - then NO. When will the exchange rate improve? When they sack Merv and raise the BoE base rate Link to comment Share on other sites More sharing options...
fleabo Posted September 10, 2010 Share Posted September 10, 2010 It could be... but I believe there is a lot more upside potential than down... I held those beliefs last year at $1.95 :biggrin: Link to comment Share on other sites More sharing options...
fleabo Posted September 10, 2010 Share Posted September 10, 2010 To make UK produced goods comparatively cheaper abroad in the hope that a national economic recovery can be export led. Is it working? I agree - this is not working a) because a lot of folk overseas (Europe/US) are skint and not looking to buy. b) our manufacturing is value-added, so we still have to buy the raw materials via a poor exchange rate. It is going to be a long haul for the UK. A low interest rates attracts no interest in your currency. Link to comment Share on other sites More sharing options...
Parley Posted September 10, 2010 Share Posted September 10, 2010 Think everyone who is thinking the exchange rate will go back again to over 2:1 may be waiting a long time. The reality is it is at the level of 1.65 to 1.80 and will probably stay in this range for quite a long time. It is like the stockmarket. 2 or 3 years ago the FTSE and ASX200 were 50% higher than now. But we are in a new economic environment and previous levels may not be seen for many years (maybe 5 maybe 10 who knows). I suggest people work on the assumption that current levels will remain for next 5 years or so and plan accordingly. Link to comment Share on other sites More sharing options...
legoman Posted September 10, 2010 Author Share Posted September 10, 2010 I dont think the pound will go much lower,I too think it can only go up now, the days of 2.4 are gone though, if you are lucky then doubling your money may be a possible. speaking to family in perth rentals are coming down and the housing market slowing there too, this id from those trying to sell and others looking for rentals. having said that we have had it good here for a long while and now pay the price i hopefully would be taking 180k to oz with me, and if i take any job for satarters then it should at least give me a cushion to make a start., if the housing drops there and rates increase it would normally mean jobs are harder to come by there. ... a new day so more positive today Link to comment Share on other sites More sharing options...
Guest girlwizz99 Posted September 10, 2010 Share Posted September 10, 2010 Whilst I don't think the recovery for the pound will be fast I do think there are inherent dangers in the Australian economy which could damage growth here meaning a more favourable exchange. The dollar is too high for tourism - the mining companies pay wages in AUD but receive cash earned in US$, the housing market is almost certainly in a 'bubble' and is likely to suffer at some stage. The country is very dependent on the strength of Chinese mineral imports and these are by no means certain in the long term. If you look at the derivative curve for GBP/AUD it shows the pound beginning to correct third quarter 2011. Fingers crossed!! In the meantime I am not too offended with building society PIBS (8.75% pa) and high yield dividend stocks in the UK. One thing is for sure, you can't trade the volatilities (or lack of) in the Australian Stock Exchange the same way as you can in the UK!! Link to comment Share on other sites More sharing options...
gemjay Posted September 10, 2010 Share Posted September 10, 2010 Whilst I don't think the recovery for the pound will be fast I do think there are inherent dangers in the Australian economy which could damage growth here meaning a more favourable exchange. The dollar is too high for tourism - the mining companies pay wages in AUD but receive cash earned in US$, the housing market is almost certainly in a 'bubble' and is likely to suffer at some stage. The country is very dependent on the strength of Chinese mineral imports and these are by no means certain in the long term. If you look at the derivative curve for GBP/AUD it shows the pound beginning to correct third quarter 2011. Fingers crossed!! In the meantime I am not too offended with building society PIBS (8.75% pa) and high yield dividend stocks in the UK. One thing is for sure, you can't trade the volatilities (or lack of) in the Australian Stock Exchange the same way as you can in the UK!! Agree Girlwizz, also I believe the fact Julia Gillards determination to bring in a mining tax will affect investment leading to the Chinese buying up Australian companies and therefore driving down the AUD, also the housing situation, once this huge bubble is burst it will lead to the AUD falling rapidly, remember Australian GDP is around 65-70% housing. Would be interested to no more about Permanent interest bearing shares as thats a new one to me many thanks gemjay:biggrin: Link to comment Share on other sites More sharing options...
Guest girlwizz99 Posted September 10, 2010 Share Posted September 10, 2010 Agree Girlwizz, also I believe the fact Julia Gillards determination to bring in a mining tax will affect investment leading to the Chinese buying up Australian companies and therefore driving down the AUD, also the housing situation, once this huge bubble is burst it will lead to the AUD falling rapidly, remember Australian GDP is around 65-70% housing. Would be interested to no more about Permanent interest bearing shares as thats a new one to me many thanks gemjay:biggrin: Permanent interest bearing shares - PIBS rates table | This is Money - There is a risk to your capital but if you stick to the bigger building societies then you are safer, especially if you diversify between a few. I'm in Nationwide and Newcastle.. not massively but needs must in this interest rate vacuum!! Link to comment Share on other sites More sharing options...
Parley Posted September 10, 2010 Share Posted September 10, 2010 Agree Girlwizz, also I believe the fact Julia Gillards determination to bring in a mining tax will affect investment leading to the Chinese buying up Australian companies and therefore driving down the AUD, also the housing situation, once this huge bubble is burst it will lead to the AUD falling rapidly, remember Australian GDP is around 65-70% housing. Would be interested to no more about Permanent interest bearing shares as thats a new one to me many thanks gemjay:biggrin: Wishful thinking. I can't see that happening at all. Link to comment Share on other sites More sharing options...
gemjay Posted September 11, 2010 Share Posted September 11, 2010 The future of the Australian currency is in doubt. The Labor party won in a delayed result in Australia. They have vowed to proceed with the previously proposed mining tax. I believe the effect will be to slow or stop growth in the Australian mining industry, a very important part of the economy. As an unintended consequence, it will cause more mining companies to sell their properties to the Chinese. The Chinese will minimize the Australian tax by exporting all mined products to their home country and declaring that they made very small profits in Australia and instead take the profits in China. In my opinion, this will have the effect of making the mining tax a smaller revenue producer than expected.IMHO Link to comment Share on other sites More sharing options...
fleabo Posted September 11, 2010 Share Posted September 11, 2010 The future of the Australian currency is in doubt. The Labor party won in a delayed result in Australia. They have vowed to proceed with the previously proposed mining tax. I believe the effect will be to slow or stop growth in the Australian mining industry, a very important part of the economy. As an unintended consequence, it will cause more mining companies to sell their properties to the Chinese. The Chinese will minimize the Australian tax by exporting all mined products to their home country and declaring that they made very small profits in Australia and instead take the profits in China. In my opinion, this will have the effect of making the mining tax a smaller revenue producer than expected.IMHO These propositions are all priced into the market already, surely? The markets are saying that the AUD is a safe currency and worth having. The pound is otherwise. I am not sure when the last bit of negative economic data came out of Australia, but you wouldn't have to look too far back to find some for the UK. Anyway - good luck to everyone! Link to comment Share on other sites More sharing options...
Guest girlwizz99 Posted September 11, 2010 Share Posted September 11, 2010 These propositions are all priced into the market already, surely? The markets are saying that the AUD is a safe currency and worth having. The pound is otherwise. I am not sure when the last bit of negative economic data came out of Australia, but you wouldn't have to look too far back to find some for the UK. Anyway - good luck to everyone! The main issue in my opinion is that the Chinese economy is not sustainable and eventually the bubble will burst - of course this will have a big negative impact on Australia. The undervalued renmimbi has enabled export led growth as the deficit led countries, such as Australia, have run up massive household debts to finance consumption and government spending. Consequently the country (China) can not alter its currency valuation (interest rates) to rebalance inflation and asset price bubbles. I am not saying there is no negative news about the UK as we all know there is... however, I would say the UK is currently as bad as it is going to get and that Australia, due to China, has problems looming.... Also, technically speaking, the aussie dollar is a 'risk' currency which rises alongside commodities and equity markets. The pound is a safe haven and a big stock market drop, as we saw last month, led to quite a rise in the value of the pound. Link to comment Share on other sites More sharing options...
Jibbah24 Posted September 11, 2010 Share Posted September 11, 2010 I think what has happened over the past year or so has shown that no one really knows for sure what will happen, however, I do love reading through all the reasoning that people put forward to support their assumptions. Some I agree with and some I don't, but one thing I have noticed on this particular forum is that there is definitely a split between those people who believe (hope) that the Australian property bubble will not burst and that the economy will continue on the upward trend, and that being so dependant on China is not a problem...and those that put forward the opposite belief. The split seems to be based on where they are living....!!! Naturally those in Aus are hoping that everything continues as is, and those outside and hoping/planning to get in are hoping that things change, :wink: Me.....I maintain that you have to be positive about whatever it is you want/believe and I love to hear the likes of girlwizz99 explaining things to me as it feed my optimism. :wubclub: I do very much tire, however, of the doom merchants of the UK media who add the final sentence to every bit of good news that comes out........."but this is likely to be as good as it gets and things will go down hill from here" My belief is that Australia is no different to any other country and in many ways is much more vulnerable. Things will change and the exchange rate will return to a more 'normal' position.....! How long this takes is anybody's guess!! Right, I'm off to be positive about changing the wheel bearings on the boat trailer!!! :twitcy: Cheers S Link to comment Share on other sites More sharing options...
gemjay Posted September 11, 2010 Share Posted September 11, 2010 I think what has happened over the past year or so has shown that no one really knows for sure what will happen, however, I do love reading through all the reasoning that people put forward to support their assumptions. Some I agree with and some I don't, but one thing I have noticed on this particular forum is that there is definitely a split between those people who believe (hope) that the Australian property bubble will not burst and that the economy will continue on the upward trend, and that being so dependant on China is not a problem...and those that put forward the opposite belief. The split seems to be based on where they are living....!!! Naturally those in Aus are hoping that everything continues as is, and those outside and hoping/planning to get in are hoping that things change, :wink: Me.....I maintain that you have to be positive about whatever it is you want/believe and I love to hear the likes of girlwizz99 explaining things to me as it feed my optimism. :wubclub: I do very much tire, however, of the doom merchants of the UK media who add the final sentence to every bit of good news that comes out........."but this is likely to be as good as it gets and things will go down hill from here" My belief is that Australia is no different to any other country and in many ways is much more vulnerable. Things will change and the exchange rate will return to a more 'normal' position.....! How long this takes is anybody's guess!! Right, I'm off to be positive about changing the wheel bearings on the boat trailer!!! :twitcy: Cheers S I have lived in Australia for 6 years and have been back in the UK now for 6 months, I have benefited from the exchange rate, but I am very aware of the situation with regards to the Australian economy, I believe the tripling of the FHOG in the second quarter of 2009 and the lowering of interest rates to an emergency setting of 3% led to 1% of the Australian population becoming first time buyers into an already overvalued housing market thus inflating the bubble further. As things stand a large percentage of Australians are now carring huge amounts of Debt. I believe Uk inflation will be pushed up over the next 1-2 years due to previous Quantitive easing and other factors such as rising food and energy costs plus the VAT increase in Jan 2011. This will put added pressure on the Bank of England to increase interest rates in 2011. For all those who are setting out on there adventure to live in Australia do as much research as possible as it is a very expensive place to live at the moment and I for one would not be exchanging any moneys to AUD unless you have to and certainly would not go near the housing market until it corrects and we see the end of the Great Australian Housing Ponzi Scheme. Good luck to all in OZ and the UK both great places to live in many different ways.IMHO Link to comment Share on other sites More sharing options...
jillgamble Posted September 11, 2010 Share Posted September 11, 2010 Sorry to appear daft but I'm not financially aware - I'm moving to Melbourne in November, if I have savings in UK bank, if the rates are low i.e. 1.70 does that mean I'm better leaving my money in UK bank and not moving it to Oz? I can use my visa debit card to withdrawn cash foc in oz and also for shopping etc? Link to comment Share on other sites More sharing options...
gemjay Posted September 11, 2010 Share Posted September 11, 2010 Sorry to appear daft but I'm not financially aware - I'm moving to Melbourne in November, if I have savings in UK bank, if the rates are low i.e. 1.70 does that mean I'm better leaving my money in UK bank and not moving it to Oz? I can use my visa debit card to withdrawn cash foc in oz and also for shopping etc? Interest rates are much higher in Australia than in the UK as is shown in the exchange rate and is partly why its so poor at the moment. Its difficucult to see which way you could benefit as the poor exchange rate would wipe out the higher interest rates on offer in Australia at the moment, I think it would be better to gain on the exchange rate than look at the attractive 6-7% interest on offer with banks such as Bankwest and CBA. Therefore I would take what I needed to get going and keep a keen eye on the exchange rate this changes all the time and will improve over time IMO. Also it all depends on how much you are going to exchange and how close to the interbank rate you get. I hope this helps maybe get advice from a currency broker but personally you really need to research the market for yourself and make your own assessment, I truly believe the Australian dollar is way overvalued and many economists are in that camp of late, its a long time between now and november rates will be different between now and then with all the news to come. IMHO Link to comment Share on other sites More sharing options...
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