Australian Dollar rate improves 5c in one day

19/05/10-The Australian Dollar, which has enjoyed enormous strength against sterling over the last 18 months, finally showed some signs of weakness today on the back of comments from the Reserve Bank and global movement of investments into US Dollars.

 

In a rare piece of good news for those of you who need to transfer money to Australia, the rate against the Pound is 5c better in just one day’s trading.

 

Two pieces of news have given rise to the improvement in exchange rate. First, the Reserve Bank of Australia has indicated that it is likely to pause its recent policy of increasing interest rates down under. Usually, a higher interest rate means a more expensive currency, and in this case the likelihood of interest rates staying where they are has led to a cheaper Australian currency in global markets.

 

Secondly, worries about the global economy have sent investors flooding to US Dollars (a ‘safe haven’ currency in times of trouble) and other currencies have suffered, notably the Australian and New Zealand dollars which have both dropped significantly in value over the last few days.

 

“Market rates for sterling against the Aussie are now back above $1.70 for the first time since February, and we have seen an influx of buyers who at last have seen the exchange rate back at relatively acceptable levels”, said Christine Hall, FX Analyst at specialist brokers Currency Index.

 

Anybody who needs to make currency transfers in Australian Dollars, for example for emigration or property purchases, should keep a close eye on developments, as any signal that the RBA are to continue raising interest rates is likely to be met with increased appetite for the currency, and therefore another increase in price.