Just how low will the Aussie dollar go?

A slew of analysts are predicting a sharply lower Australian dollar. But there’s an upside to the scenario.

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The high Australian dollar seen for much of the year – which made overseas travel and some online shopping so alluring – is gone and not coming back, say many currency analysts.

“The Australian dollar has fallen sharply since the US Federal Reserve signalled its liquidity-boosting ‘quantitative easing’ policy could come to an end in 2014. The policy had been a key factor in the Australian dollar’s long run above parity,” as The Australian Financial Review has reported.

A National Australia Bank (ASX: NAB) currency analyst, to name just one such voice, says that the Australian dollar should fall to “low 80s.” The dollar now sits at around US92.5¢.

The new National Australia Bank prediction joins a slew of other analyst predictions, most of which include a significant further fall for the Australian dollar, and some of which are considerably more extreme. Few commentators see a recovery, with Commonwealth Bank (ASX: CBA) a lone voice in predicting an end-of-year return to about US96¢.

The upside of a falling dollar

What many investors don’t realize is that the falling dollar may positively affect the results of Australian companies with significant overseas operations and which must repatriate money earned elsewhere. Such companies include Computershare (ASX: CPU) and QBE Insurance (ASX: QBE). A falling dollar also helps to make Australian exports more competitive.

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Motley Fool contributor Catherine Baab-Muguira does not own shares in any company mentioned here.

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