Potential bad news if you’re planning a US holiday, folks, the Aussie dollar is forecast to take quite the tumble. One analyst reckons it’ll fall to its weakest point since the aftermath of 2009’s global financial crisis.
Financial firm Morgan Stanley says the dollar could drop to 67 US cents in 2018 and even further to 65 US cents in 2019. At the time of writing, the Aussie dollar is trading at 75 US cents.
Without going too far into the nerdy mechanics behind the drop, it’s got a lot to do with investment. Hans Redeker, Morgan Stanley’s chief global currency strategist, says that while the AUD was performing well on the back of emerging markets, that’s not the case anymore, particularly when investors continue to move towards developing-nation currencies with “super attractive” real yields.
“In the past, when emerging markets were doing well, people were buying the Australian dollar,” he said. “It is no longer going to work like this. We are going to see that break simply because there is no yield.”
To be fair, old mate’s prediction is the most pessimistic in Bloomberg‘s survey of more than 30 financial analysts, with the median estimate for next year clocking in at 80 US cents. So maybe we’re not fucked after all.
The Australian dollar has dipped by more than 1 percent this month, a feat that’s crowned it as the worst-performing major currency this month. Yeesh.
Fingers crossed the dollar actually performs well against the US and goes up instead of down like Redeker says it will. Here’s hoping those other analysts Bloomberg surveyed know what’s up.
