MENU

Why the Australian dollar has held its value

Back in 2016, there were a number of experts who predicted that the Australian dollar would sharply loose value against the US dollar. This has simply not materialised despite increasing US interest rates and the fact that the RBA has largely held domestic interest rates steady. Moreover, the United States economy has been booming, with record levels of GDP growth, extremely low unemployment and a massive tax cut from President Trump. Despite all of this, the Australian dollar has not lost value. Why?

Firstly, interest rates in the United States are still lower than Australia. This is the most important reason behind the strength of the Australian dollar. As investors look to leave their money somewhere safe abroad, they are still earning a higher return in Australia than they would abroad.

Australia also presents a more stable political environment in the short-run and a significant number of investors are very fearful about Trump’s behaviour, which has been extremely unpredictable, to say the least. Trade wars, twitter outbreaks and nuclear confrontation with North Korea all serve as major risks in the immediate future. Australia does not face any of these challenges at the moment.

The Australian economy has also shown itself to be very resilient and economic growth has been stable. The level of confidence in the Australian economy means that investors feel comfortable placing their funds in the country over the long run and don’t fear a significant currency devaluation.

The Disruptors: 3 Revolutionary Aussie Companies to Back for 2018

We’re living in one of the most exciting times in investing history. Innovation and a booming culture of entrepreneurship are constantly creating new companies with the potential to make forward-thinking investors very rich. Now more than ever, one small, smart investment could make a huge difference to your wealth.

That’s why at The Motley Fool we’ve been scrutinizing the ASX to uncover the kinds of companies that we believe could turn into the next Cochlear or REA Group.

We’ve found three exciting companies that we believe re poised to perform in the new year. Click here to uncover these ideas!

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…

Including:

The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!