Should I buy my US dollars today?

[JohnK]

Noticed the cash exchanges were offering around USD1.01-1.02 today. The highest I have seen recently was around USD1.06 so still a reasonable rate on offer now.

 

[N860CR]

I had the same panic earlier in the week. I'm going to the US on my first proper, no BS, no "half-work" holiday for ages so I wanted to make sure I could make the most of the high exchange!

I was fairly lucky, changed all my cash for hotels etc when it was at about $1.07 and then bought a few thousand extra spending money on Tuesday before it fell too hard (my actual rate ended up being 1.03 which I consider pretty good).

Who knows what will happen to it... but my thinking is that I'd feel worse if I waited and had to pay more for everything rather than act now and maybe not get as good a rate.

 

[Bunty]

[The US dollar as the reverse world currency seems to do the inverse of all other currencies ie the worse the financial crisis in the US the bigger the flood of money to US Treasuries strengthening their dollar.

Any other country and their dollar would drop significantly in the same circumstances. The mostly likely long term solution for the US government is substantially increase the number of dollars in their economy effectively devaluing the currency.

They have already done this and will continue to do such but it appears the currencies 'true' valuation will take years to be reflected as large firms and countries (like China) just keep dumping more and more money into the US because they can't find anywhere else to hold so much cash and to keep their investment from losing money - this type of behavior in a company usually means the end is near but I'm guessing the players involved can kick the problem down the road for a while longer.

Bottom-line the US dollar value isn't following any investment sense making it's movement unpredictable. Probably go up for a few days than crash than go up. A lack of crisis will see the likely slow long term decline.

If I was you I'd probably wait it out. The best time to change was last week. When you ask the question based on market movements already in play it is usually too late. At least you aren't traveling for awhile for there should be ups and downs before you leave.

Good luck with the lottery that is currency fluctuations

Just remember, although the US was downgraded by S&P, they are on their own - there are at least 2 other major Ratings Agencies that have not downgraded, ie Moody's nor Fitch. I think S&P had quite a high rating on Bank of America and other US financial institutions who were holding toxic assets just before the GFC, so they don't get it right all the time.

Also, while the USA has been downgraded, it is still one of the highest rated Sovereigns, possibly the highest. This may explain why there is a rush to the USD, away from more "risky" currencies (eg AUD) with a lower rating (eg Yen).

Certainly, there should be a lot of money moving out of the troubled Euro.

There is also very recent speculation that the RBA will drop interest rates next month. It was only a week and half ago, many pundits were expecting an increase in rates! If rates do actually fall, that will put additional downward pressure on the AUD, though some of that risk is already reflected in the AUD. Then again, QE3 in the USA may put some downward pressure on the USD.

I think, when the dust settles and logic prevails after the panic, the AUD will strengthen as people realise our rates are still higher than almost anywhere else in the developed world and we have a reasonably solid national economy, albeit heaviliy reliant on China (which in turn is heavily reliant on the US consumers). Go China!

BTW, I am not an economist!

 

[Baysider]

IMHO the AUD is in even better shape against the USD than it was last week, and will soon be heading beyond USD 1.10. The fact that the ASX has rebounded whilst the US markets flounder is testament to this.

 

[Adrienne Wright]

wishing i had the cash to buy some USD
question to those in the know - is the HKD fixed against the AUD or is it variable to the market fluctuations as well?

 

[serfty]

wishing i had the cash to buy some usd
question to those in the know - is the hkd fixed against the aud or is it variable to the market fluctuations as well?

As far as I know, HKD7.8≈USD1

 

[Baysider]

If anything the HKD seems to be linked to the USD. When the AUD is up against the USD it also buys lots more HKDs.

 

[drron]

wishing i had the cash to buy some USD
question to those in the know - is the HKD fixed against the AUD or is it variable to the market fluctuations as well?

As Serfty has said it is fixed to the US dollar not the Aussie.

 

[Deathifier]

Hi Franky,
Unless you are planning on buying a fairly large quantity ($10k+ at least) of USD then you'll be best served by waiting until closer to your travel time.

January is 4 months away and parking the USD in an account will net you next to nothing vs. the 4-5% it earns just sitting in most Aussie online savings accounts.

The exchange rate is also not likely to suffer a sustained dramatic drop (or rise) in that time unless something happens in China and Asia that wrecks the demand for Aus resources, or the US and Eurozone find some miraculous yet still sane cure for their debt issues.

You really need to look at how much you are converting, what you can earn with that cash in the meantime (in both AUD and USD form), and then see how much of an impact some "bad" rates, like 95c, would mean for your conversion.

You should also look at the margins charged for your conversion - from what I've read the Wizard card will give you a really low margin, but it may not be able to convert and store the USD.
Most other places will slug you the largest margin they can get away with, so some of the 'savings' by converting in advance could be eroded by a poorer margin.

As for predictions on the rate I've seen people and 'experts' saying it's going to go to 60-80c "within months" for a couple of years now, and instead it wandered all the way up to $1.10 before its recent tumble back down to parity

Note that I'm not an expert, I just monitor the AUD:USD rate regularly because part of my income is in USD.

- Deathifier

 

[Point Hunter]

Such a difficult question to respond to, obviously. I think we're all interested in the answers though.

I'm also looking at a US venture around about Jan-Feb and was very frustrated when the rate started tumbling last week. There's so much uncertainty and volatility at the moment. My strategy is to wait it out for now. It's nudging 1.03 this morning with most exchange rates 98-99. The US has kept their rate at naught and there's rumour that it will stay there for around 24 months. Even if our rates go down .25-.75 we're still substantially higher, obviously.

I think there's reasonable arguments in favour of 1.10 being hit again in the coming months.

 

[cove]

Today the birds are singing and the sky is blue. If you want to be neither a full on winner or loser then buying half now at 1.03 and then the other half at 1.09 you would achieve 1.06 with your average.

 

[rechoboam]

Yea they do retail but is just out of their offices, no commission and generally a good spread. I haven't used in a while but my girlfriend went to the office in Melbourne last week and got some pounds and euros. Good spread but not quite as good as I remembered.The stuff of yesterday is just crazy, for the Market to drop 5.5 percent in the morning and then finish 1.2% in the black is just crazy, no basis at all. There are some people who would be making killings of all this, such big fluctuations in such short periods of time. No way to be able to predict it, but if you can move fast enough there are gains to be made.

Well in theory you could have made ten times your money back on derivatives but in practice once it falls 5pc there is no way to tell whether it will stop or go up again as it did here. I wouldn't bother. But I am an efficient markets proponent.

 

[afflinesman]

The dollar is tipped to be anywhere between 80 cents and a $1.70 in the next 12 months. As suggested, purchase some currency now but remember you have effectively borrowed that money so you should consider the cost of interest.