If you live overseas or receive your income in US Dollars (USD), recent developments in the Australian Dollar (AUD) can have an impact on your finances. Here's a simple explanation of what's been happening and how it may affect you:
In the past few weeks, the Australian Dollar has been fluctuating within a specific range that started in March 2023. After reaching a high against the USD in June & again on July 14th, the AUD/USD exchange rate has been on a downward trend, closing lower last week (image below)
Why does this matter to you?
If you get paid in USD but need to convert your income into the local currency where you live, a weaker AUD could be beneficial for you. When the AUD weakens against the USD, it means you'll get more of your local currency for each USD you convert.
However, it's important to be aware that currency exchange rates are influenced by various factors, such as economic data, central bank decisions, and global events. So, the value of the AUD can still change in the future, and this may impact the amount of local currency you receive when converting your USD income.
As market participants eagerly await the Federal Open Market Committee (FOMC) meeting scheduled for this week, there is strong anticipation of a 25-basis point interest rate hike. In fact, the markets have already priced in a 96% probability of this move. It's essential to understand that any outcome below this anticipated hike or no change at all could lead to a considerable sell-off in the USD.
If you're unsure about how these currency fluctuations may affect your financial situation, it's a good idea to keep an eye on the exchange rates and consider consulting with a financial professional who can provide personalised advice based on your specific circumstances.
Being informed can help you make better decisions when dealing with currency conversions and managing your finances effectively.
As always, feel free to reach out to me and I would be glad to help.