As a currency, the Australian Dollar reflects the strength of the economy of Australia. This medium of exchange faced adversities lately because of the coronavirus or COVID-19 crisis. The latter, according to economists, has left inconceivable impacts that consist of the lockdown of the national economy.
The coronavirus pandemic has led to adverse scenarios, such as debts, heightened levels of unemployment, and deficits. Furthermore, during the March quarter, the Australian economy contracted by 0.3 per cent. This event led Australian Treasurer Joshua Anthony Frydenberg to admit that the nation is in recession. This ongoing economic downturn is the first in Australia within 30 years.
Nonetheless, during the second quarter of 2020, the Australian Dollar demonstrated bouncebackability. The currency hit high levels twice, specifically in April and June, confirming its recovery. With these recent developments, consumers may feel curious about how they can maximise their utilisation of their hard-earned money.
April and June 2020 Rallying Incidences of Australia’s Currency
In March 2020, the coronavirus pandemic was in the middle of pummeling the world’s countries. Australia did not find itself spared from the global healthcare threat’s repercussions. The country’s citizens struggled with the coronavirus pandemic’s adverse effects on their wellness and livelihoods, among many others.
Furthermore, the country’s currency, the Australian Dollar, traded down to as low as 57.43 US cents, which is below the 0.60-mark in late March. This grim event took place after trading from the neighbourhood of 70 US cents at the beginning of 2020.
However, in late April, the Australian Dollar manifested itself as regaining strength amid the COVID-19 pandemic. The apparent comeback revealed the currency trading merely north of 0.65 US cents. This rebound indicated that the Australian Dollar/US Dollar currency pair had almost bounced back to levels before the dramatic drop.
The official currency of Australia also presented itself that time to be outperforming other significant currencies, including the New Zealand Dollar, the euro, and the British Pound. OFX is a funds transfer specialist with a daily currency update. The group explained that the upturn in the value of Australia’s official medium of exchange demonstrated a more upbeat investor sentiment.
Moreover, according to OFX, the market appetite for risk had developed that time. This scenario came as nations worldwide and governments all over Australia had started easing lockdown and social distancing measures. OFX’s daily currency update indicated that the country’s currency was rebounding due to Australia’s forceful response to the COVID-19 crisis as well. The public believed that the government’s actions were among the more prosperous efforts to fight the outbreak, and they made an economic recovery on the horizon.
Furthermore, after nosediving to a 17-year low in March, the Australian Dollar rose to pre-COVID-19 levels again in early June. The currency hit 70.36 US cents. A partial explanation for this rebounding action is the perception of the national economy recuperating fast. Sean Callow remarked that the currency of Australia is recovering quickly, thanks to the rallying Chinese economy. The Westpac Banking Corporation’s currency strategist said that the latter would possibly re-ignite interest in Australia’s exports.
Shane Oliver shared the same perspective as Callow, saying that the robustness in China’s economy is one reason for the rebound. Besides the recovery of Australia’s significant export market, the AMP chief economist added that Australia’s currency is recovering due to the beliefs that the national economy is performing better than that of the United States. Oliver shared that the Australian Dollar had been moving up because of the Quantitative Easing program of the US Federal Reserve System swamping that of the Reserve Bank of Australia as well.
The rallying action of Australia’s national currency may make consumers feel excited, despite the prevailing COVID-19 crisis atmosphere. The favourable event opens the public to auspicious options that they can perform to get the most of their hard-earned funds.
5 Advantageous Activities to Do With the Dollar at High Value
The Australian Dollar’s value has demonstrated an extraordinary surge. Over the past few months, this development has been among several of the atypical happenings in the financial markets scene. Since mid-March, this spike in the national currency is a 21-per cent gain versus the US Dollar.
With this scenario, plenty of consumers might be wondering how they can get the most of their money when its value is high. Here are five beneficial ways:
1. Invest in businesses that depend on imports.
If a consumer is looking to capitalise on a more robust currency, it is advantageous for him to pour his investment funds on industries relying on imports. As the Australian Dollar regains its strength, the cost to firms that depend on imports to conduct business should plummet. This scenario theoretically should heighten these enterprises’ profitability and, ultimately, the return for the investing consumer.
2. Enjoy online shopping.
While the national currency’s value is at its high level, online shopping aficionados should engage with their favourite activity. It is because the spike in Australia’s dollar improves the consumers’ purchasing power. Besides, online shoppers will likely find their preferred services and products in foreign online retailers at more affordable prices.
3. Engage in foreign exchange trading.
Seasoned traders can consider foreign exchange trading when the value of the national currency is high. This activity involves an individual trying to make a profit by predicting the value of one currency compared to another. People who are inexperienced in foreign exchange trading should not rush into this activity though because it can be a high-risk venture for them.
4. Lock in a favourable exchange rate by entering into a forward contract.
Consumers can benefit from the Australian Dollar at its peak value by entering into a forward contract. This activity involves them locking in a great rate, but they do not need to make an international money transfer. Consumers engaging in this activity can lock in the rate for a future transfer, which is typically within three months to one year.
5. Exchange one’s money when the dollar’s value is at a high level.
Australia’s dollar at its high value translates to better exchange rates on the cards for consumers, especially those who are making international money transfers. People can take advantage of the national currency’s summit value by exchanging their cash. If they do not have anywhere to move their money to, then, they can save it for a forthcoming holiday.
The Australian Dollar getting strong again is undoubtedly welcome news for consumers. It exhibits the fact that the country is capable of combating the coronavirus crisis and getting back on its feet rapidly. Considering that the pandemic is still underway, sustaining this bouncebackability event may be a lingering question to the government and economists.
But consumers and the country can stay hopeful. After all, Australia successfully averted going into level-4 restrictions and a full-scale lockdown. These feats are among the indicators which affirmed that Australia is well-placed to recuperate from the pandemic and kick-start its economic engines soon.