MENU

Two ways to profit from a weak Australian dollar

On Tuesday the Reserve Bank of Australia opted to keep rates on hold for another month and signalled that it has no intention of raising rates any time soon.

This caused the Australian dollar to give back recent gains, sending it down from 77 U.S. cents to 75.8 U.S. cents.

With the U.S. Federal Reserve now periodically raising rates, I believe this is the start of even greater declines for the local currency.

I’m not alone in this view either, with economists at Westpac Banking Corp (ASX: WBC) also predicting a sharp decline for the dollar.

According to the most recent Westpac Weekly, its economists expect the Australian dollar to fall to 73 U.S. cents by December, before ultimately dropping to 65 U.S. cents by the end of next year.

Whilst this wouldn’t be great news for companies that import raw materials, some companies would benefit greatly.

Here are two worth considering:

BWX Ltd (ASX: BWX)

The company behind the Sukin skincare range has had huge success in the Australian market, but has recently expanded its presence internationally. As well as launching Sukin into Canada, China, and the United Kingdom, this week the company announced the acquisition of the number one natural cosmetics brand in the United States, Mineral Fusion. I expect BWX will leverage its distribution network to launch the Sukin brand into the lucrative market in the near future.

Nanosonics Ltd. (ASX: NAN)

In February this infection control specialist reported an incredible 131% jump in half-year sales to $36.1 million. As the vast majority of these sales were generated in the enormous U.S. market, I believe that Nanosonics is a company that is likely to benefit greatly from favourable currency movements. With its shares down 17% in the last three months, I feel now could be an opportune time to invest.

As well as the two shares above, I believe this dividend share could benefit due to its market-leading position internationally.

**JUST ANNOUNCED** Free Report: Top ASX dividend stock for 2017-18

You probably don't know this market leader, but it's making waves in Asia and already boasts a term-deposit-crushing dividend of almost 5%. A debt free balance sheet and dominant market position at home and abroad mean this company offers investors income and some real-deal growth potential.

Simply click here to grab your free copy of this up-to-the-minute research report right now.

Motley Fool contributor James Mickleboro owns shares of Westpac Banking Corp. The Motley Fool Australia owns shares of BWX Limited and Nanosonics Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.