The Aussie dollar was on a downward trajectory for the majority of 2023. After reaching a high on 0.72 USD in late January 2023, it hit yearly lows in October but mounted a small recovery in recent months. Forecasts last year expected the Australian Dollar to be stronger but China's economy has struggled.
Australian Dollar Predictions for 2024
The general outlook for this year remains optimistic with three major Australian banks expecting the value of the Australian Dollar to increase by the end of 2024.
NAB's Australian dollar forecast is predicting the AUD will trade at 0.73 USD by December 2024. Over the long-term NAB is optimistic and believes the Australian dollar will reach $0.78 by December 2025.
ING's future FX outlook is very positive, they are predicting the AUD/USD exchange rate will be at 0.71 USD by June 2024, and 0.73 USD by December 2024. Sluggish Chinese growth and high interest rates have led to the AUD being the most "undervalued currency in the G10 space" based on their analysis.
Westpac published their economic report in December 2023, predicting the AUD will increase modestly during the year and trade at 0.70 USD by the end of 2024.
Commonwealth Bank think an economic recession is likely in 2024 and it could send the Australian Dollar below 0.60 USD. CBA expects the decrease in value to be short-lived as the FED will cut interest rates in the US faster than expected.
Key factors impacting the Australian dollar
There are several key factors driving the performance of the Australian dollar, the major ones include:
RBA interest hikes. From a record low of 0.10% in April 2022, the Reserve Bank has made regular increases to the official cash rate, which sits at 4.10% as of October 2023. Interest rate hikes tend to increase foreign investment demand for the AUD, which helps drive the value of the Aussie dollar higher.
Inflation. The Reserve Bank's inflation target aims to keep annual consumer price inflation between 2 and 3%. However, the Consumer Price Index (CPI) rose 5.4% in the twelve-month period ending in September, representing a notable increase compared to the 4.9% increase in July. High inflation tends to drive the value of the Aussie dollar down due to reduced purchasing power.
Economic slowdown. With rising interest rates and inflation impacting economies around the world, there's the very real threat of a global recession. This could lead to reduced demand from China and other Asian countries for Australia's key exports, pushing the value of the Australian dollar down.
Mining. Commodities are a major driver of the Australian economy, with iron ore, coal and other commodities responsible for 67% of all exports. Increases in demand for commodities can drive the value of the AUD up, but falling prices can have a negative effect.
Farming. Agriculture is another important driver of the Australian economy and made up 11.6% of the nation's goods and services exports in 2021-22. The impacts of climate change could affect the farming industry in the years to come, while controversy surrounding live animal exports could also affect cattle and sheep exports.
Finder survey: How many Australians think the Australian dollar will get stronger over the next 12 months?
Response
No
56.67%
Yes
43.33%
Source: Finder survey by Pure Profile of 1004 Australians, December 2023
While there are multiple factors impacting the value of the Australian dollar, one of the key factors in 2023 has been falling commodities prices. Falling prices have been prompted by China's slower than expected economic recovery after the pandemic. And with commodities exports a major driver of the Australian economy and China our largest trading partner, this has seen the AUD weaken against other major currencies.
It's extremely difficult to predict how any currency pair will perform in the future. Inflation, interest rate hikes and the threat of a recession all have the potential to impact currency values here and overseas, while economic developments in China can also have a significant effect on the AUD's performance. Ultimately, it's essential to do your own research and consider a wide range of factors before deciding whether or not to buy Australian dollars.
From a historical perspective, the Australian dollar has been strong in 2023 against currencies such as the Japanese yen, the South African rand and New Zealand dollar. Check currency charts that track exchange rates over an extended period to get a detailed view of how the AUD is performing.
Tim Falk is a writer for Finder, writing across a diverse range of topics. Over the course of his 15-year writing career, Tim has reported on everything from travel and personal finance to pets and TV soap operas. When he’s not staring at his computer, you can usually find him exploring the great outdoors.
What are the best options for sending or receiving a large amount of money overseas? Read this $50,000 case study with exchange rates and fees comparison.
Send an international money transfer to someone without a bank account. Get it there instantly and they can pick it up in person, in cash. Get quotes now.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
