The rise of the AUD

laffer

I have some £ saved in an online savings account with instant access. I have been thinking about moving out to Oz but with the rise of the AUD against the pound my £ is worth less and less each day. I am not sure what to do (whether to convert now or leave it in the UK) because part of me thinks that the £ will have to rebound one day but I am not quite sure when that day will be and having my British Savings in Oz would be a great headstart.

Should I just look for a high interest fixed term deposit (say a year) and try to leave my money in £ until (hopefully) it starts to rise against the AUD on the back of an improving (again hopefully) British economy?

Any suggestions for a high interest 1 year bond or deposit account or a way to hedge against the rise of the AUD? I have bever seen the AUD above 50p but it keep rising well above it now.

laffer

bump

neil324

Difficult one. But i'll take a stab at it. Suppose it depends when you will need it in Aus and your outlook for the UK in that timeframe. You have said 1 year, now just my opinion but although a new government should have a positive effect on Sterling. There will be massive public spending cuts,tax hikes,massive unemployment.
Also the BOE is not prepared to tighten in a timely and aggressive manner so as to counter a loose fiscal stance. Where around the world many central banks will be rushing for the exits.
Infact can anyone say anything positive about the UK outlook?

On the otherhand things looks very good for Aus which is showing in the value of its currency. You are making a wise move going to Aus and as you have said the money would make a good start.

gozomark

Also the BOE is not prepared to tighten in a timely and aggressive manner so as to counter a loose fiscal stance. - I disagree with that - remember, BOE has one main job - keep inflation at 2% +/- 1% on a 2 year view. That is what they are doing now. As you point out, tax hikes & spending cuts are on the way.

gozomark

And if the issuer goes bust, bye, bye OPs plans to move to Australia - very high yields come with commensurate risk profile

laffer

Thanks for the replies.

I do not think I have ever seen the GBP drop below 2 against the AUD so you can appreciate my shock as I see it dive to 1.89 in todays trading.

I think I will lock away what I have for a year. Corporate Bond whilst returning decent interest is a bit too risky as I do need this money eventually. I guess I will be looking more towards some form of Fixed Bank savings account. Any recommendations?

The alternative is that I plonk it over to Oz now and try to tie it up in a high interest earning bond but as I am a non resident I presume I will get killed on tax on any interest I earn.

laffer

GBP getting hammered again today. Wonder if it will turn into the Peso soon. I would have thought that there was a level for the Government to start to intervene?

bendix

laffer wrote: »

Thanks for the replies.

I do not think I have ever seen the GBP drop below 2 against the AUD so you can appreciate my shock as I see it dive to 1.89 in todays trading.

I think I will lock away what I have for a year. Corporate Bond whilst returning decent interest is a bit too risky as I do need this money eventually. I guess I will be looking more towards some form of Fixed Bank savings account. Any recommendations?

The alternative is that I plonk it over to Oz now and try to tie it up in a high interest earning bond but as I am a non resident I presume I will get killed on tax on any interest I earn.

You'd be unlikely to be allowed to open such an investment without being resident. If you could manage it, non-resident tax is quite low (about 10% I think), but it usually works for those who live there and then leave, thus becoming non-resident.

As an aside, if the state of the respective currencies is the major factor inhibiting your decision to emigrate, you might want to question why you are doing it. It seems rather like the tail wagging the dog to me.

gozomark

laffer wrote: »

GBP getting hammered again today. Wonder if it will turn into the Peso soon. I would have thought that there was a level for the Government to start to intervene?

BoE is talking the pound down, not up
http://uk.reuters.com/article/idUKLO3385720090924

Sterling fell to its weakest against the euro in more than five months on Thursday, pressured after Bank of England Governor Mervyn King said a weak domestic currency was helping to rebalance the nation's economy.
King told a regional UK newspaper sterling's fall "will be helpful" to rebalance the UK economy to one focused more on exports.

laffer

Is there no pressure on Mervyn King to resign his spot? This did all happen under his watch.

gozomark

Why should he resign ?

AFAIK, banking supervision is not part of the BoE's mandate, but the FSA's responsibility - a weak £ policy has been very sensible - it doesn't suit you (and it doesn't suit me), but it does suit the country