Heading overseas? Don’t get short-changed by exchange rates
Save articles for later
Add articles to your saved list and come back to them any time.
As the number of Australians heading to Europe and other warmer climes rapidly approaches pre-pandemic levels, travellers who don’t keep across currency exchange rates risk being short-changed.
Experts say the Australian dollar could be buying more of the British pound and the Kiwi dollar by the end of the year, while they expect little change against the US dollar and euro.
Travellers heading to Europe this year who don’t keep across currency exchange rates risk being short-changed.
Westpac is forecasting the pound could reach 54 pence by the end of the year, from about 52 pence now. And the Australian dollar could be buying $NZ1.11 from about $NZ1.08 now.
Sean Callow, senior currency strategist at Westpac, expects the Australian dollar to be trading roughly where it is now against the US dollar, at about US69¢, and against the euro, at about 62 euro cents, for the rest of this year.
Mahjabeen Zaman, the head of foreign exchange research at ANZ, has the same forecast as Westpac for the pound and Kiwi dollar. She says the Australian dollar could be buying 61 euro cents by the end of this year.
Zaman says our dollar could be buying US70¢ by the end of the year, and could even reach US73¢ by the end of 2024.
Shane Oliver, chief economist at AMP, says there could be continuing weakness in the US dollar as markets believe the US Federal Reserve is close to the top, if not at the top, of its rate-rising cycle.
Relative interest rates are important drivers of exchange rates as higher interest rates in one country, compared to others, can attract more global investors, which can help to strengthen the country’s currency.
Oliver says the downtrend in the US dollar could push the Australian dollar above $US70¢ by the end of this year.
Oliver differs from the other two analysts on the pound. He says our dollar could fall to about 50 pence by the end of the year.
The Australian Reserve Bank is likely close to the top of its rate tightening cycle, whereas the Bank of England may have a “couple more [rate] hikes to go,” he says.
“That could push the British pound up from here and the Australian dollar could be buying closer to 50 pence by the end of the year; but I don’t have a strong view on that,” Oliver says.
Our dollar could be unchanged against the euro by the end of the year, and unchanged against the Kiwi dollar or “slightly higher” by the end of the year, Oliver says.
Forecasting currency exchange rates is notoriously difficult and travellers may want to hedge their bets by monitoring exchange rates and then changing some of their travel money when rates are favourable.
It is one thing to get a good exchange rate, but you have to also be careful of fees.
There are online-only money transfer providers that have debit cards linked to accounts on which multiple currencies can be held and can have fees that are very low compared to traditional providers, such as banks.
Jack Pinczewski, Asia-Pacific government relations manager at Wise, an online foreign exchange firm, says some providers say they have low or no fees, only to put a margin on the exchange rate, which does not have to be disclosed.
Wise uses the “mid-market” exchange rate, which anyone can find on Google. The fee that is shown is the total cost of the transfer.
- Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.
For expert tips on how to save, invest and make the most of your money, delivered to your inbox every Sunday, sign up for our Real Money newsletter here.
Most Viewed in Money
From our partners
Source: Read Full Article