Lower $AUD and overseas investments

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The value of the Australian dollar can have a big impact on overseas investments. There is a consensus that the $A will continue to head lower against the $US this year and probably next. Predictions vary from between US80 cents and US85 cents over the next 12 month period.

If you agree the Australian dollar will fall, now would be a good time to buy overseas investments. But beware of having to pay ongoing costs, such as in property, where expenses including taxes, repairs and maintenance will rise if the $A falls against the investment's currency.

And if you already hold overseas investments, they should appreciate in value if there's a fall in the $A, meaning the next 12 months or so could be a good time to consider selling those where you have made good gains and want to crystallise those gains.

But it's never an easy decision.

Currency markets have historically been very volatile so there is some risk in basing investment decisions on exchange rate forecasts as they can, and often do, change.

For those seeking to make an overseas investment, I suggest looking into some risk management tools that can help fix the price of an overseas purchase, such as a property, ahead of settlement.

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