The paper "Rush to Swap Aussie Dollars" is an outstanding example of a micro and macroeconomic assignment. Due to the fast-falling rates of the Aussie dollar, the majority of people heading overseas for Christmas and January holidays have opted to an early swap of their Australian dollars. Waiting for the US dollar to recover is a massive risk; the US dollar might or might not recover. As a result, most of these travelers do not want to take this risk, hence the rush to swap Aussie dollars prior to the holiday season.
According to the currency exchange trend, the euro, for example, receives the highest demand before June, which falls during the summer holidays, while the US dollar attracts the highest demands towards the Christmas holidays. Margaret de Polignac, a product head at OzForex also asserts that the Australian dollar has fallen drastically. She links this drop to the change in travel patterns of the clients they serve. For Instance, OzForex being a currency exchange business that also offers the prepaid travel card service reports that they usually note a drop in the travel activities during the off-peak months; July to September.
However, this particular year things changed and more people seemed to purchase more travel cards and load more money during the same mentioned time frame. This reaffirms the point mentioned earlier in the article; more travelers are swapping their Aussie dollar before the Christmas holidays because of the drop. Statistics reveal that for the past twelve months the Australian dollar has lost to the US dollar by an estimated 8%. Additionally, it has also lost a hefty 20% since it reached the record level in 2011 (Collett, 2014 p. 1). The author reiterates that forecasting currency exchange rates remain a rather tricky aspect in the foreign currency market, but travel cards have proven a beneficial way of locking exchange rates.
Although analysts project the Aussie dollar to trade lower than the pound and greenback, many variables remain in existence; affecting the exchange rates. For example, one of the leading factors is the relative interest rates; if a country’ s interest rates are higher than in other countries, then their currency remains supported in the market.
But for the case of Australia, currently facing the worst inflation rates, rising interest rates would not suffice, and, therefore, the drop in the Aussie dollar.
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