Five reasons to expect the Australian dollar to rise


Please click here to view Shane Oliver's views in respect to the Australian dollar.

Key points raised are :

  • Since it's February 2021 high of nearly $US0.80 the $A has fallen on the back of worries about the global growth outlook, worries about China, the strong $US and relatively less aggressive monetary tightening by the RBA.
  • However there is good reason to expect the $A to rise into next year: it's undervalued, short term interest rates differentials look likely to shift in favour of Australia, sentiment towards the $A is negative, commodities still look to have entered a new super cycle, and Australia has a solid current account surplus.
  • There is a case for Australian based investors to tilt a bit to hedged global investments but while maintaining a decent exposure to foreigh currency.
  • The main downside risk for the $A would be if there as a hard landing globally and/or in Australia next year.