Interest Rate Rise in Australia!

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Interest Rate Rise in Australia!
Topic Started: Aug 4 2006, 08:20 AM (148 Views)
HIFX plc	Aug 4 2006, 08:20 AM Post #1
Redback Posts: 9 Group: Members Member #3 Joined: June 30, 2006	Reserve Bank of Australia Raise Interest Rates The Reserve Bank of Australia (RBA) increased interest rates on 2nd August by 0.25% to 6.0% reflecting the RBA’s assessment that economic activity remains strong and inflationary pressures are increasing. Movement of interest rates is the principal tool available to the Governor of the RBA, Ian Macfarlane, to maintain control over the inflation. The consumer price index (CPI) is the key inflation indicator providing a price comparison of goods and services now compared to 12 months ago is at 4% annually, well above the targeted 2%-3% range of the RBA. The recent rise in the Aussie dollar is due partly to Australia being the world’s largest supplier of Nickel and second largest supplier of Gold. As the value of these commodities rise; Nickel reached its highest level for 19 years and gold is at a five week high. The Australian dollar (AUD) is directly affected by metal prices because raw materials comprise about 60% of Australia’s exports and 10% of gross domestic product (GDP). In the past 3 months, the Australian dollar has mirrored the fluctuations in the gold prices, strengthening as gold strengthens and weakening as gold weakens. With a higher interest rate, and the possibility of future interest rate rises the Australian dollar is an attractive proposition for investors, offering better returns on their investment at 6%, compared to 4.5% in the UK for example. Due to the number of factors that influence the currency markets, it is impossible to forecast 100% accurately if the market is going to move up or down in the future. With house prices in the UK showing the strongest growth for a year at 5.4% year-on-year, migrants may find themselves with more equity from their home sales with which to start their new lives in Australia. Protecting yourself from currency movements, even before you have sold your property is straightforward with HIFX, the migration currency specialists, with a “forward contract”. A forward contract involves putting down a 10% deposit to secure a rate of exchange until you need the currency when you can pay the balance of 90%. This way of buying currency is flexible and can accommodate changes in the time scale originally agreed – due to house sales falling through for example. If you have more funds then you anticipated because of an increase in your house price during the forward contract, you can transfer these on a “spot contract”. Essentially, this means that you “buy now, pay now”, but because it is likely to be a smaller amount than the forward contract there is less risk associated with it. Being able to make the right decision based on your individual circumstances is something that the migration team at HiFX has a huge experience of. Your dedicated dealer will be able to implement a tailored strategy, free of charge, to help you manage your requirements in the most effective way possible. You can contact the Migration team on 01753 859 169 or email: migration@hifx.co.uk. Alternatively, visit the website: www.hifx.co.uk/migration



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