Friday, April 22

Where did our savings go?


It’s been another remarkable week for the Australian dollar. Yesterday it rose to a new record high against the US dollar, for the third time in as many days. One Australian dollar now buys you US$1.075. Analysts are tipping that the dollar will hit US$1.10 before the year is out. The last time it traded at this level was 1982 before the currency was floated. It’s hard to believe that despite relocating back to Sydney I still live in a country whose currency is worth noticeably more than the US dollar.

While living in London we got rather use to the concept of earning money worth more than the US dollar. However, the Sterling was always a rare breed. In all of our travels the only other currencies trading at similar levels were in the Middle East, reflecting no doubt the power of an oil economy. For example, the Omani Rial is currently buying US$2.60 and the Jordanian Dinar is buying $US1.40. In ten days I fly San Francisco for work so the strong Australian dollar has made some impromptu shopping incredibly tempting.

Of course a strong Australian dollar spells more bad news for the savings we’ve left in the UK. Yesterday one British pound was buying A$1.52 for several hours before closing one cent higher. Incredibly the rate's been worse in recent months. While we were stranded in Antarctica the pound hit a record low of A$1.51 on New Year’s Eve. Regular readers will recall my lament over the plunging value of the pound. When we first arrived in the UK the pound was buying almost a dollar more than today. As a result Garry and I have simply decided to view our UK savings as a long-term currency investment as we wait for the Bank of England to start raising its base rate.

UPDATE: April 29
The Australian dollar climbed to yet another yesterday. It's now buying US$1.095. Most analysts expect it to reach US$1.10 before the end of next week.  Some analysts are now predicting the dollar will peak at US$1.15 before the year over.  It's hard to believe our dollar is worth 10% more than the US dollar.

UPDATE: May 2
Incredibly, the Australian dollar passed the US$1.10 mark this morning.  In less than a month the dollar has appreciated almost ten percent against its American rival.

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