In recent months, the Australian Dollar (AUD) has performed worse than most other global currencies, largely because of the country’s economic and political uncertainty and a weakening of its interest rate advantage. However, this week’s release of the Reserve Bank of Australia's monetary policy statement, which hinted at a 2018 interest rate hike, has given the AUD a much-needed boost. During early trading on Tuesday, the AUD was quoted 0.56% higher at 0.7645 against the US Dollar.
Expectations of Economic Growth and Labour Market Tightening
The RBA expressed cautious optimism about the economy, which grew at its “trend rate” (its long run average rate of growth) during this year up to the September quarter. Australia’s GDP is expected to increase by around 3 percent annually in the next few years, and the outlook for non-mining business investment is better than before. In addition, the RBA reported a shortage of skilled workers, which means that the 2017 drop in Australia’s unemployment rate should continue into the future.
According to Michael Workman, a Commonwealth Bank of Australia economist, “The employment market outlook is quite positive with the leading indicators pointing to solid growth over coming quarters. There are some reports of labour market scarcity. However, wages growth remains low. The RBA expects a gradual lift in wages growth as labour market conditions tighten.”
As for the Aussie Dollar, the RBA stated that it currently falls within the same range as it has for the last two years. The AUD is a commodity currency, which is a type of currency from countries that depend on certain raw material exports. It’s especially influenced by demand for iron ore and metals like gold.
Protections from AUD Exchange Rate Volatility
It can be challenging for individuals and businesses to stay abreast of the news that affects AUD and other currency exchange rates and to keep track of fluctuations over time. They can protect themselves from exchange rate volatility by working with an online international money transfer provider to lock in favorable exchange rates. With a forward contract, exchange rates can be locked in for a few days or several months, which means that short-term exchange rate movement won’t affect what the customer pays. With limit orders, customers set a target exchange rate at which their transaction will be triggered. Once the exchange rate moves into that range, the customer gets alerted and the transfer completes.
There are a variety of international money transfer providers that offer better exchange rates and lower transaction fees than traditional financial institutions. Many of them provide additional services to businesses that regularly send cross-border payments to vendors and suppliers and receive cross-border payments from customers. FXcompared helps you find the service that’s best for your needs by comparing the costs of money transfers across providers in an accurate and transparent manner. All you need to do is enter the destination and amount of your transfer.
