When Is it a good time to convert AUD to USD

Is it a good time to convert AUD to USD?

If you’re thinking to convert AUD to USD, naturally, you’ll be asking about the exchange rates and whether it’s good timing to do so. As a short answer, the timing for converting AUD to USD may not be the best at the moment. Although the US Dollar is America’s official currency, this doesn’t mean that you should avoid holidaying or visiting America, but you may just want to wait and see if the exchange rates may change to be more in your favour. Currency forecasts may help you get an idea of what’s to come in the future, but be sure to not fully rely on them either, as the exchange rates can be quite unpredictable. But to consider the future of the United States Dollar, we must first consider its past.

Good time to convert AUD to USD

Many asset classes have experienced a miserable return during 2022, however, the United States Dollar remains an exception. The USD exchange rate has strengthened, due to the Federal Reserve Bank’s efforts to beat skyrocketing inflation. The US Dollar index has risen by around 17% this year. Notably, the USD exchange rate appears to be even stronger when compared to the bad performance of bonds, cryptocurrencies, stocks, and real estate.

When talking about a strong dollar, this term refers to the value of dollars as compared to a different currency. The Federal Reserve Bank has helped USD to strengthen due to the monetary policy they adopted, which lifted federal funds rates from a bit more than zero to around 3.75 to 4%. This has been in the process from the start of 2022 right up until November. Quite a few market observers expect one more percentage point increase by the year 2023.

Now, you may be wondering, how strong is the US Dollar? To help put it into perspective, one Euro would now be equal to $0.98 USD, while last year, it would have equalled 1.16 USD. From another point of view, the US Dollar would be worth 148 Japanese Yen, while last year, it would have only been worth 114 Yen. Make sure to regularly check the exchange rates if you need to exchange currency. These exchange rates change frequently and can be quite unpredictable. A currency converter can also be quite helpful if you’re stuck!

Australian dollar exchange rates as compared to the US Dollar

Australian Dollar Exchange

Right now, one Australian Dollar is worth 0.67 United States Dollars. The US Dollar is nearly twice as strong as the Australian dollar, which can be partly attributed to the Reserve Bank of Australia slowing its interest rates pace.

Dollar Exchange Rate

Understandably, inflation has also had quite a large role to play. The monetary policy of the Reserve Bank of Australia has been under quite a bit of pressure, due to the slowed economic growth in China. Additionally, China has lowered its demands for Australia’s commodities and consequently, commodity prices have fallen. This begs the question, what is the history of the Australian Dollar and US Dollar exchange rates?

At the start of Covid-19, many investors switched to safe investments, due to the concerns they held about countries’ commodity prices and exports. The last time when the AUD and USD exchange rate was so low, was during 2001-2002 according to the Australian Dollar to US Dollar chart.

However, The AUD later made a recovery and proved to be quite resilient despite some trade tensions with China. China even banned Australian coal and the forex pair gained more than 9% in 2020. While at the start of 2021, the AUD and USD exchange rates were strong, with an 0.8 intraday in 2021 on the 25th of February. Despite this, its gains and exchange rate plummeted for the remainder of the year, with the currency pair losing about 5.6% during 2021.

What can we expect for the United States Currency in 2023?

United States Currency

Throughout this year, the United States currency has been skyrocketing. The US Dollar index measures the performance of the US Dollar against weighted baskets of other currencies. This has risen to levels so high that was only last seen in 2002 May. The global growth outlook has become unstable over the few months, and now, the US Dollar holds quite an advantage over other large currencies and economies. From being told so, you would expect the US Dollar to only keep growing from this point. But, the Federal Reserve system ensures to use a cycle of monetary tightening to contain inflation. While considering the future of the Australian dollar and US Dollar, please do be careful of currency forecasts as they can be quite unreliable.

Since pressure continues to build, other countries are likely to see major currencies lose value against the US Dollar due to the hiking rates the US Dollar shows. Consequently, the likelihood of a global recession also rises.

It may not be surprising to hear that the US is expected to continue performing well. Despite such convincing information, not all market observers think that the US Dollar will continue to perform this well and it’s best to remind yourself that the true exchange rates are never fixed exchange rates.

Some analysts believe that the US Dollar will fall into recession next year and that the Fed will cut interest rates, so be sure to keep checking on the exchange rates if you need to use a money exchange service.

You’ve probably realised that the US Dollar exchange rates are quite unpredictable and seem to be going up. But, that might not be the case in the future, so be sure to keep an eye on the USD exchange rate and set rate alerts. If you plan to send money or use exchange services, be sure to use a currency converter and be wary of the currency forecast. Conducting your own research can really help to get a better grip on what the current situation is, no matter the currencies you’re looking to exchange for.