Latest news with #AussieDollar
ABC News
7 days ago
- Business
- ABC News
Is the Aussie dollar actually getting stronger?
Confused about all those news reports on the strength of the Aussie dollar? For most of this year, there's been a constant message that the local currency is shooting the lights out, bounding to ever greater heights. Since the beginning of the year, it has jumped more than 10 per cent against the US dollar. That sounds like reason to celebrate until you look at travelling or purchasing something online from anywhere other than the US. That's when the penny drops, if you'll excuse the pun. That's when you realise the Aussie dollar fundamentally remains weak, especially given it was around 80 per cent stronger a decade ago. For the story is not so much one of Australian dollar greatness. It's more a tale of the decline in the greenback and an erosion of trust in Washington. The once almighty American dollar has been falling against almost every major currency ever since Donald Trump became the 47th US president. None more so than the Euro which has risen more than 15 per cent against the greenback this year. It began with President Trump's inauguration following his pledge to impose tariffs on America's trading partners. It accelerated with the chaotic tariff implementation in April, the escalating threats against China, Canada and Mexico and then the backdowns. The clout the US holds as the world's biggest economy, and the benefits that flow from controlling the global reserve currency, is beginning to unwind. The French refer to it as "privilege exorbitant". It's a term that highlights the power conferred upon the US by virtue of its currency being the international standard by which all others are measured. Everything, from currencies to commodities, is priced in US dollars. America is in the sole position of being able to purchase its imports in its own currency. Everyone else must convert to US dollars. That boosts demand for greenbacks, strengthening the currency and making it cheaper for Americans to buy products from abroad. It also lowers US interest rates. America's central role in the financial system has ensured demand for US government debt from international investors. US government debt is considered the safest investment on the planet and, in times of turmoil, investors dump everything and head for the safe haven of American government bonds. That's now changing. And the change, under the Trump administration, is accelerating. At the turn of the century, the US dollar accounted for 73 per cent of global foreign reserves, such was the international demand by foreign governments for greenbacks. By the end of 2024, that share had dropped to just 58 per cent. It's a similar story with US Treasuries. A decade ago, foreigners held more than half of US government debt on issue. That's now down to a third. The rise of BRICS — Brazil, Russia, India, China, South Africa — has been deliberately targeted as an alternative to circumvent America's dominant standing in the global financial system. They've been joined by Egypt, Saudi Arabia, Argentina, Ethiopia, Iran and the United Arab Emirates as part of the push towards de-dollarisation. For the first time, they're being directly aided by the US itself. There is a view within the US administration that the US dollar's reserve currency status is a burden on the economy. As we discovered during the mining investment boom, the surging Australian dollar rendered much of our manufacturing sector uncompetitive. The price of imports plunged, sending many local operators to the wall, or forcing them to shift their production offshore. But the decline in the Aussie dollar, from $US1.10 more than a decade ago to 65c now, has done little to reverse that trend. Australia essentially has de-industrialised. Manufacturing comprises just 5 per cent of the economy, the lowest in the OECD, which is one of the reasons our productivity growth is so low. Trump believes a weaker US dollar, and stepping back from its central role in global finance, will revive American industry. But at what cost? What the administration fails to grasp is the impact of its reserve status on interest rates. The American economy has thrived because of the sheer volume of global cash coursing through its system. Deliberately walking back from that will have the opposite effect. Interest rates will rise and Washington will struggle to keep its finances in order as the interest bill — already at $US1 trillion a year — continues to grow. Europe has been basking in the glow of America's woes. America's increasing use of financial sanctions against its enemies already had undermined confidence in the US dollar as the pillar of global finance. But the Trump administration's aggressive approach to trade and defence with even its closest allies has shaken international trust in the US's standing. In April, as financial markets plunged on news of the President's Liberation Day tariffs, the US dollar slumped and the flow of money out of the US turned into a flood. Much of it found its way to alternative safe havens in Switzerland — pushing the Swiss Franc higher — and other part of Europe. As a result, the euro appears now to be permanently elevated. That's despite much lower interest rates across the European Union. Australians, in the meantime, gradually are becoming accustomed to measuring the currency against an array of alternative yardsticks. We may have strengthened against the US dollar this year. But so has everyone else.
ABC News
17-07-2025
- Business
- ABC News
Thursday Finance with Ian Verender
Unemployment figures out today suggest a weakening jobs market and consequently, the Aussie Dollar continued its retreat. Ian Verender has the details.
Daily Telegraph
26-06-2025
- Daily Telegraph
The best Travel Money cards in 2025
Don't miss out on the headlines from Lifestyle. Followed categories will be added to My News. Escape's Doc Holiday, Dilvin Yasa, answers your travel-related questions. For many years I have used CommBank Travel Money card without any problems, but I'm thinking better options may be available. Can you recommend any alternatives? I receive a lot of emails about travel money cards, so it's probably best if I start by addressing some of their key pros and cons. Avoiding exchange rate fluctuations during your travels is a major benefit, since you effectively 'lock in' your money before you depart Australia (helpful when the Aussie dollar is falling faster than the Ozempic supply). Depending on the card you choose, you can have easy access to multiple currencies on the same card and you don't have to risk using a card that's linked to your Australian bank account while you're travelling overseas. It also means you avoid multiple currency conversion fees and you don't have to carry large amounts of cash. Of course, the disadvantages of travel money cards are nothing to sniff at. Some merchants may not accept travel money cards, or the currency of the country you're visiting may not be supported. There are plenty of fees associated with using a travel money card (everything from opening and reloading the card to ATM withdrawals and cashing out the balance of the card), lengthy load times where you will not have access to your cash, and limits on pre-authorisations. Comparison sites such as Canstar look at the pros and cons of using a travel money card compared with credit and debit cards and I'd urge every reader intent on travelling overseas to read through their options. Some merchants may not accept travel money cards, or the currency of the country you're visiting may not be supported. For your specific situation, I will say that Choice, too, compared travel money cards recently and found the CommBank Travel Money Card is one of the better options, particularly since it only charges users in one instance ($3.50 for ATM withdrawals overseas). If you were to compare this product with any other, I'd recommend looking at the Wise Travel Card, which lets you hold, spend in and convert 40 currencies – significantly more than the 16 currencies your current card holds. One thing to watch here, however, is that while free ATM withdrawals are advertised, it's only up to $350 a month, before you start attracting charges. You may also wish to look at Revolut Travel Card, which holds 30-plus currencies and remains a popular choice. Airlines such as Qantas are working with banks to find a solution. We booked our family holiday and found we were charged twice by the airline, with the second amount (later cancelled) showing as a 'pending charge', which caused our account to be overdrawn. How common is this practice? I've had this happen to me and it's incredibly frustrating (not to mention anxiety-inducing). Having had a chat with various airlines about 'the double dip', it seems that they're just as frustrated by what is a banking issue that is largely out of their control. Essentially, this happens when the authorisation doesn't drop off at the time of the payment being captured. Airlines such as Qantas are working with banks to find a solution, but in the meantime, it's a good idea to keep an eye on your account balance any time you book a holiday and to contact your bank immediately should you notice an authorisation set to cause financial chaos. You can explain the situation to your bank and ask them to remove it immediately. While banks have varying policies regarding how they go about this, and whether they'll need clarification from the travel provider, you should be able to get this sorted fairly easily. I find pleasantries and a cheerful manner go a long way to getting what you want. Good luck! I arrived in Mongolia a carnivore yet swiftly became a born-again vegetarian. I'm interested in a tour to Mongolia. Would you recommend it for vegetarians? I arrived in Mongolia a carnivore yet swiftly became a born-again vegetarian for the duration of my trip (it turns out that boiled and fried sheep tail is not for everyone) so yes, it can be done. I did it on the fly, popping into supermarkets in Ulaanbaatar and stocking up on canned vegetables and noodles, but it's best to let your tour leader know when you first book that you have dietary restrictions. Where possible, they will call ahead to find vegetarian alternatives to traditional khuushuur, tsuivan and buuz at any stops you make. The one thing that will mean the difference between a digestible meal and one that might even be enjoyable? A bottle of sriracha (or any other sauce you prefer), which you can apply liberally to anything that's placed before you. Mongols might be among some of the warmest people I've encountered on my travels, but they are not known for their love of seasoning. Need help? Doc Holiday is on duty to answer your travel questions. Email docholiday@ Personal replies are unfortunately not possible. Originally published as Doc Holiday: What travel money card is best?
ABC News
05-06-2025
- Business
- ABC News
Live: ASX set to slip after Trump-Musk feud triggers sell-off on Wall Street
The Australian share market is in for a lacklustre start after closing flat on Thursday. The Aussie dollar is sitting around 65 US cents. A very public spat between Donald Trump and Elon Musk has sent shockwaves through financial markets, overshadowing trade diplomacy and fuelling a late-session sell-off on Wall Street. Follow the day's financial news and insights from our specialist business reporters on our live blog. Disclaimer: this blog is not intended as investment advice.
Reuters
13-05-2025
- Business
- Reuters
Australia's pension funds start questioning US strategies
SINGAPORE/SYDNEY, May 13 (Reuters) - Funds in Australia's A$4.2 trillion ($2.7 trillion) pension sector are rethinking some of their long-held strategies of buying U.S. assets and the dollar, as confidence in American growth wanes. Volatility around Sino-U.S. trade tensions this year has forced investors to reassess their U.S. exposure and the role of the dollar, which has lately failed to behave as a safe haven currency amid heightened uncertainty around Washington's economic policy. While there have not yet been any major shifts in strategy, currency dealing desks in Australia have noticed modest changes in hedging demand from some pension funds. Those hedging tweaks are under the spotlight globally and Australia's pension funds, known locally as superannuation funds, have long kept low FX hedging ratios on large and growing foreign stock portfolios. When U.S. equities fell, funds allowed hedging ratios to rise by not keeping their currency positions exactly in step with asset prices, said Troy Fraser, head of foreign exchange sales for Australia and New Zealand at Citi in Sydney. "You would expect the funds to be selling Aussie and buying U.S. to adjust or to rebalance their hedge ratio," he said. "We've seen a little bit of that, but not a lot. I think funds are generally happy to be longer Aussie." Fraser said funds were weighing their asset mix, hedging costs and the outright level of the Aussie. Were it to extend it could move the currency, and in separate research Citi in February estimated that a 5% shift in hedging now could push the Australian dollar as much as 11% higher against the greenback. At about $0.64 , it's been falling on the dollar for nearly 15 years since touching $1.10 in 2011. Along with a tendency to drop reliably whenever global stocks fell, cushioning losses in Aussie dollar terms, the Aussie's behaviour encouraged a low hedging ratio. Industry-wide hedging on foreign equities was roughly 22% in the December quarter, according to the most recent regulatory data. "Unhedged has worked," said Ben McCaw, a senior portfolio manager at MLC Asset Management. "It was lowering the volatility of the portfolio (and) providing a positive return to the portfolio ... so that was almost the ultimate asset," he said. Now, however, long- and short-term factors are starting to shift how the Australian currency trades. He has been reducing U.S. dollar currency exposure for about three years. Others are keeping a watching brief. CBUS, which manages more than A$100 billion, has kept currency exposure steady but the U.S. dollar, which fell through market turbulence in April, caught the attention of fund CIO Leigh Gavin. "The USD is probably one of the few asset classes that hasn't rebounded from the early April lows, and we think that's interesting," he said. "It's certainly something we're monitoring, but it's still pretty early days." Some fund chiefs say U.S. allocations are under review. Australian super funds run a high allocation to equities, by global standards, at nearly 60%, according to regulatory data, with roughly half that abroad, as of December 2024. According to Westpac, some A$555 billion is invested in U.S. stocks by Australian domiciled investors. "That's been a very good place to be investing over the last couple of years," said John Pearce, chief investment officer of A$139 billion fund UniSuper on the fund's podcast in April. "Like every other fund, we are questioning our exposure to the U.S. It would be fair to say that we've hit peak exposure and will be reducing over time," he said. To be sure, no increase in the fund's hedging ratio, which typically swings between 30-40%, is being considered, a UniSuper spokesperson said in emailed remarks to Reuters. And there are very big funds that are not budging in their strategies. "We have no view of changing our hedge position or any of our positions based on that event," said Michael Clavin, head of income and markets at Aware Super, referring to last month's tariff-driven drawdown and market volatility. The chief investment officer of AustralianSuper, the largest super fund with more than A$365 billion under management, also told the Financial Times last month it would continue investing more than half its offshore flows into the U.S. Still, the Aussie's 3% rise against the U.S. dollar this year has meant the year-to-date 0.6% drop in the S&P 500 (.SPX), opens new tab translates to a near 3.5% fall in Australian dollar terms, which if it persists or extends could start to drive a response. "Being underweight the Aussie dollar has been something which has typically rewarded Australian investors," said Cameron Systermans, head of multi-asset in the Asia-Pacific at fund manager and adviser Mercer. "So if there were to be a durable uptrend in the Aussie dollar, that would be a bit of a pain trade, I think, for a lot of the asset owners in Australia. And it might force them to really reassess whether that still makes sense." ($1 = 1.5625 Australian dollars)
