Where the Aussie dollar is telling us to travel this year

Almost every economist agrees, the Australian dollar has a tough six months ahead. So where should you plan to travel if you want to get maximum bang for your buck in the months ahead?

This article is republished from my weekly column which appears in The Sydney Morning Herald and The Age.

Almost every economist agrees, the Australian dollar has a tough six months ahead, and for hungry travellers keen to take on the world while their mortgage rates are rising, every dollar counts.

So if you’re committed to travelling, but you want to get maximum bang for your Aussie bucks, where do you travel to? Let’s look ahead at what the predictions for interest rates and the Australian dollar tell us.

Currently, we’re at the tail end of a pandemic and global supply chain shock, facing hyperinflation which is driving up interest rates and the cost of living. The Reserve Bank in Australia has been trying to slow the economy down and is potentially nearing or at the end of the raising cycle if inflation stays on the downtrend.

This is because in Australia, most people on fixed home loans only have them locked in for 2-3 years. So, any tightening in the interest rate cycle hits consumers fast and hard in the hip pocket, their consumer spending locks up, and the economy slows.

Malcolm Wood, the Head of Asset Allocation at Ord Minnett, says the economic indicators in Australia have already rolled over, so if there is any future rate rise it is just the Reserve Bank making sure they’ve done the job of slowing inflation properly.

You can read the whole article on The Sydney Morning Herald here. It appeared in both digital and print editions.