In an interview with the Australian Financial Review, Citigroup's foreign exchange strategist Todd Elmer indicated that certain currencies like the Australian, Canadian, and New Zealand dollars are probably all still overvalued in light of ongoing downward pressure.
Citigroup's official forecasts agree, with the AUD predicted to hit US$0.75 in March, and US$0.70 by December 2015.
While I've written before about the problems of taking forecasts at face value, the Australian currency does continue to look overvalued with our commodity prices crashing and the potential for additional rate cuts in the near future.
A falling Australian dollar isn't a reason to go out and buy shares with foreign earnings just for the thrill of it, but it should prompt you to ask yourself, 'Is my portfolio diversified the way I would like it to be?'
If the answer to that question is no then don't panic, because you still have time to pick up a few foreign-earning shares in appealing sectors.
Here are some of the best ASX-listed shares with foreign currency earnings:
Westfield Corp Ltd (ASX:WFD) – property, earns most of its money in US$ with some Euro and GBP
Westfield has featured several times previously on my list of top ASX shares for foreign currency exposure. While it has the steady growth associated with property companies, it also pays a fair dividend and has some major projects coming to fruition in the next few years.
It has climbed 50% in the past year but could go further if the AUD continues to decline.
CSL Limited (ASX: CSL) – biomedical, has around 40% earnings in US$ with rest in foreign currencies
CSL is a pretty well-known company, one that writer Mike King has pegged as the best stock on the ASX.
With its recent acquisition of vaccine producer Novartis and a strong record of share buybacks and earnings growth, CSL is a very strong candidate for purchase even without the added benefit of foreign currency earnings – this is one share to buy and hold forever.
Amcor Limited (ASX: AMC) – packaging giant, widely diversified earnings plus strong China exposure
Whoever would have thought that the humble cardboard box could be a billion-dollar business? Actually that's not strictly true, since Amcor has changed its strategy to focus more on innovative, higher-margin products, but there's no denying it's made shareholders a lot of money from stuff that later becomes 'rubbish'.
With earnings mostly in Euros and US dollars, Amcor delivered 25% net profit to investors last year and fellow contributor Andrew Mudie thinks that investors could see another 10% or more in earnings growth this year.
Certainly the falling Aussie dollar won't hurt, and neither will exposure to the booming Chinese packaging market.
