Currently US80.55 cents, the Australian dollar (AUD) is at its lowest level in almost five years against the greenback.
The latest falls in the AUD over the weekend and earlier today come despite poor manufacturing data out of the US.
Whilst the weakening Australian economy is being blamed for part of the falls, it's not the only reason our dollar is tumbling.
Indeed at a time when commodity prices are plummeting and local GDP growth is being revised downwards, the US economy is staging a dramatic recovery. As a result, the USD is surging against major currencies, including the AUD and Euro.
Source: Google Finance. Click to enlarge.
As can be seen above, in late 2014 the USD appreciated significantly against the Euro and AUD by 13% and 10.5%, respectively. Increased concerns that Europe is close to firing up its printing presses and begin a US-style quantitative easing program could see further volatility in the USD/EUR in the coming year.
Whilst a higher USD will make North American travel more expensive in 2015, conversely, some Aussies will benefit from a stronger greenback.
For example investors with holdings in companies which have significant exposure to North America will directly benefit. Hearing implant manufacturer Cochlear Limited (ASX: COH), investment bank Macquarie Group Ltd (ASX: MQG), recently restructured general insurer QBE Insurance Group Ltd (ASX: QBE) and leisure and entertainment business Ardent Leisure Group (ASX: AAD) are four examples.
However there will also be some indirect beneficiaries of a lower dollar, such as local retailers Harvey Norman Holdings Limited (ASX: HVN) and JB Hi-Fi Limited (ASX: JBH), and beverage and canned fruit producer Coca-Cola Amatil Ltd (ASX: CCL).
But if you thought the Australian dollar is already at its lowest point, think again.
Local unemployment levels are expected to jump in 2015/2016 and interest rates are tipped to fall, prompting some experts, including RBA Governor Glenn Stevens, to suggest the AUD could fall much lower in the near future.
So if you haven't already, right now appears a good time to position your share portfolio to benefit from the falls.
