There have been signs of strength from the Aussie dollar recently but that hasn't fooled Morgan Stanley, which (according to reports in the Fairfax press) still maintains a current estimate for fair value at just US82.6 cents.
And that's just for now. By the end of the year the Fairfax press has reported that the wealth management group expects the AUD will be down at just US84 cents, and then US76 cents by the end of 2015. That reflects a 13.3% downside from today's US87.7 cent mark.
So what does this mean for investors?
Well, two things in particular come to mind. First of all, the Australian economy will receive a much needed boost. While the AUD has traded at above average levels over the last few years, Australia's exporters have struggled to compete with international rivals. In fact, Commonwealth Bank economist Diana Mousina is reported to have said the dollar's recent 10% fall would boost economic growth up to 1% over the next two years.
The second benefit is that companies that generate a lot of their earnings overseas – particularly in the US – will thrive. That includes companies such as ResMed Inc. (CHESS) (ASX: RMD), QBE Insurance Group Ltd (ASX: QBE) and CSL Limited (ASX: CSL). Westfield Corp Ltd (ASX: WFD) will also benefit substantially, considering the majority of its shopping centres are located in the United States.
