Is it a submarine? Is it a lead balloon? No, it’s the Australian dollar at a cheaper exchange rate than it's been since 2010!
Right now you can get a better Australian dollar exchange rate than at any time in the last three years, making Australia a far cheaper place to study abroad.
The US dollar is at 1.11 against the Aussie, a record high exchange rate not available since October 2010. Meanwhile, the euro to Australian dollar exchange rate is at just under 1.45, the best exchange rate since September 2010. The Australian dollar looks set to keep falling for the foreseeable future, making this a long-term opportunity.
Why is the Aussie so cheap?
Well, first, because Australia's economy is on the rocks. Australia has shed about 11,000 full-time jobs in the last two months, with little hope of an upturn. At the same time, the economic outlook for the rest of the world is brightening. American shoppers are at their most confident since 2007, and the Eurozone could soon exit recession. So, what we've got is the perfect recipe for most currencies to gain against the Australian dollar!
Given this, what can you do to make the most of the exchange rate if you decide to study abroad in Australia?
1. Don't assume the exchange rate will always get better.
Just because you can get more Australian dollars at the moment, doesn't mean the Australian dollar will always be cheaper. Instead, if you like the exchange rate, it's better to exchange currencies sooner rather than later. The foreign exchange market is volatile, meaning a good exchange rate can very quickly disappear.
2. Talk to a currency dealer about what might happen next.
Right now, it looks as though the Australian dollar will continue to become cheaper. However, a month from now, this might not be the case. This is because the foreign exchange market is volatile, meaning it's hard to tell what'll happen down the line. For more up-to-date advice before you exchange currencies, talk to a currency dealer.
3. Talk to more than one company before you exchange currencies.
The exchange rate you're offered can change dramatically depending on who you talk to. In fact, your bank may offer you an exchange up to 4% worse than that you'll receive from a foreign exchange broker. Before you buy your Australian dollars it pays to make sure you're being offered the best exchange rate possible.
Peter Lavelle is a currency dealer at Pure FX, a foreign exchange broker. If you have any questions about getting the best exchange rate when you study abroad in Australia, feel free to email him at [email protected].