The Australian Dollar (A$) (AUSUSD) is down 3.2% in three months, following the economy and commodity prices downwards.
Australian Dollar (AUD)
As can be seen above, the Australian dollar (blue line) appears to have been on a one-way ticket downwards recently. By contrast, the USA's leading sharemarket index, the S&P 500 (.INX), is up 4.5%.
The AUD's falls appear to be mirroring declines in iron ore and other commodity prices, on which the Australian economy relies to fuel its growth.
How to make money from the falling Aussie dollar
The falling AUD has been music to the ears of exporters and investors with foreign currency exposure.
For example, Australian gold mining companies will incur costs in Aussie dollars (which are falling) but sell their gold in US dollars (which are more valuable) on the international market.
Investors with US shares are also benefitting. For example, if an investor bought shares included in the S&P 500 three months ago, they would have made 4.55% (see above) on the share price growth, in US dollars (up 3%).
My shares in Apple Inc are up 16% in three months, in US dollars.
However, you don't need a US stockbroking account to benefit easily from a lower Australian dollar. For example, the Vanguard MSCI Index International Shares ETF (ASX: VGS) invests in international shares after converting your investment to the foreign currencies it needs to buy shares, such as the US dollar.
You may also choose to invest in Australian companies that conduct most of their business internationally, such as investment bank Macquarie Group Ltd (ASX: MQG), or biotechnology businesses Cochlear Limited (ASX: COH) and ResMed Inc. (CHESS) (ASX: RMD).
Foolish Takeaway
I do not believe the Australian dollar will fall much further from today's levels. However, I think it is sensible to have foreign currency exposure, both from a risk (e.g. falling Australian dollar) and returns (e.g. access to companies like Apple) perspective.
