The strength of the Australian Dollar and what it means for expats
The Aussie Dollar has soared in value over the last few months due to being buoyed by a strong Australian economy that is enjoying the tail end of a decade long mining boom and a profitable trading relationship with booming China, but what does that mean for expats?
For a start, the high value of the Australian Dollar now means that when compared to the UK the land down under has become a pretty expensive place to visit or live. In a recent survey carried out by ECA International the cost of goods and services in Sydney is now up to 25% more expensive than the cost of those equivalent items in Central London.
In comparison, the British Pound has been on the wrong end of a kicking since the start of 2013. The UK’s poor economic performance has seen the country slide ever closer to a possible triple dip recession, which is weighing on the currency. Despite the economic troubles the main culprit for Sterling’s weakness is none other than the Bank of England whose monetary policy has forcibly weakened the currency by flooding the market with cash in an effort to get spending and loans moving again.
For expats already living in Australia now is a great time to book a flight home and visit the old country. It’s also a good time for any Australia-based expats to invest in property purchases and other big purchases in the UK.
Unfortunately for people looking to head in the opposite direction the high value ‘Aussie’ could prove to be something of hurdle. Families that had been planning a move for months may now find the cost of goods in Australia has risen beyond what they initially planned for.
Overseas companies are also beginning to think twice about sending UK workers to Oz as for many, the higher cost of living means that the allowance they have to pay employees ensure they maintain their purchasing power while on assignment has increased considerably in recent years.
On the 12th of March the GBP/AUD currency pair fell to its lowest level in 28 years, and economists are expecting it fall even further over the next few months. As of the 14th of March the GBP/AUD currency pair is trading in the region of £1.446 to the Dollar.
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