Australian Economy

Should you convert $A for that planned overseas trip now, or wait?

Exchange rates are notoriously difficult to predict and views of currency market watchers often vary.

Fiona Griffiths, currency specialist at the Currency Shop, a comparison website, takes a differing view on the US dollar exchange rate.

Higher interest rates in one country, compared to others, can attract more global investors, which can help to strengthen the country’s currency. However, both the US and Australian central banks are raising interest rates, Griffiths says.

She says a clouded outlook for the economy in China – Australia’s principal trading partner – could continue to weigh on the value of the Australian dollar.

If you are travelling to the US, “changing Australian dollars for US dollars sooner, as opposed to closer to departure, could be beneficial,” Griffiths says.


However, the Australian dollar could continue to rise against the pound for the remainder of this year, given the deteriorating economic outlook for the United Kingdom, she says.

“According to the OECD, UK economic growth is expected to stall in 2023, which would mean that the Bank of England could struggle to raise interest rates without tipping the country into recession,” Griffiths says.

It could therefore be beneficial for Australians travelling to the UK to buy pounds closer to their departure date, she says.

The Australian dollar has strengthened against the euro this year, with the value of the euro hit by fallout from the war in Ukraine.

However, inflation is soaring in Europe and the European Central Bank is expected to increase interest rates in coming months, which could help to lift the value of the euro, Griffiths says.

“It could be [better] to change Australian dollars for euros sooner rather than later in the year,” she says.

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