The Aussie dollar will fall further. Forget short-term targets. Focus on long-term investing profits.
We had to laugh as we read a Fairfax report that “Australia’s major banks have slashed their forecasts for the dollar, with some tipping it will drop to 98 US cents, triggered by further interest rate cuts and reduced government spending.”
Talk about closing the stable door after the horse has bolted…
True to form, just as they do with savings rates and mortgage rates, the big banks target price for the Aussie dollar looks uncannily similar…
|Bank||Target Price||Target Date|
|National Australia Bank (ASX: NAB)||US$0.98||September ‘12|
|Westpac (ASX: WBC)||US$0.98||September ‘12|
|Commonwealth Bank (ASX: CBA)||US$0.98||June ‘12|
|ANZ (ASX: ANZ)||$US1.04||Current Qtr|
You can bet your bottom greenback they’ll be quick to adjust their target prices again should the dollar move significantly up or down from here.
Predicting such movements is a mug’s game. There are so many variables, predicting where the Aussie dollar might be trading in September is virtually impossible.
The Aussie dollar and Aussie property prices are overvalued. But how the reversion to the mean occurs and how to profit from it or avoid losses is a completely different question.
We don’t know when the AUD will fall, but it will fall. And when it does our already strongly performing international investments will receive a substantial boost. If you haven’t considered investing in international shares, we encourage you to take a closer look.
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The Motley Fool‘s purpose is to help the world invest, better. Take Stock is The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it’s still available. Bruce Jackson has an interest in CBA, WBC, ANZ and NAB. This article contains general investment advice only (under AFSL 400691).