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Strong Aussie dollar and international shares

Discussion in 'Shares' started by jomond, 8th Apr, 2008.

  1. jomond

    jomond Member

    18th Feb, 2008
    The Aussie dollar is very strong at the moment in comparison to places like the US. It seems like a great time to invest in these countries, assuming that the dollar will weaken as the interest rate gap gets smaller in the future.

    I've been thinking about taking advantage of it and investing in American shares. Is this a good idea at the moment?
  2. Simon Hampel

    Simon Hampel Co-founder Staff Member

    9th Jun, 2005
    Sydney, Australia
    It depends on your timeframe I guess.

    In the short to medium term, I would actually expect the interest rate gap to widen somewhat ... I don't think we've seen the last of the rate rises in Australia, and I think the US in recession will likely see rates drop further. I know this isn't the only thing that affects the AUD, but I do think it will continue to be strong for some time yet. I still hear commentators suggest parity or higher within the next couple of years.

    However, if you are looking for longer term investments - the US markets are down quite a bit from their highs last year - so now might be a good time to picking up bargains ... especially in the financial sector (if you are sure you can pick stocks which aren't going to go bust !!!). One question you have to answer first though is ... has the US market bottomed, or is worse still to come ??
  3. Billv

    Billv Getting there

    15th Jul, 2007
    Sydney, NSW

    As Sim said, there could be further drops in the US$.

    Additionaly, the problems with the US economy won't go away in a hurry and they haven't resolved the subprime problems either so I wouldn't touch stocks at the moment and particularly financial stocks.

    My 2c