The Par Value of the Australian Dollar 

To my knowledge, no model projecting directional movements in exchange rates is significantly superior to tossing a coin.  I am aware that of the thousands who try, some are quite successful.  So are winners of coin-tossing contests.

Alan Greenspan (then US Federal Reserve Chairman) March 2004.

As at May 2014, the par value of the Australian Dollar is 94.6 US cents.  As at 26 May 2014, the current value is 92.4 so it is unlikely the Australian Dollar will fall in the short term.

Forecasting the future vale of the Australian Dollar relative to the US Dollar is very difficult but we can gauge the current par value.  The chart below shows the fit of a model recently developed by foreseechange.

 

 

The model fits very well, explaining 79% of the variance since 1990.  There are several factors included in the model.  Forecasting the Australian dollar requires forecasts of these factors, which is no easier than forecasting the Australian Dollar!  However, the model enables us to estimate the current par value and to evaluate scenarios about the future value.

At present, we see little likelihood of major change over the next month or so.

I will update the par value of the Australian Dollar on this page every month.

Charlie Nelson
May 2014

UPDATE: November 2014 par value is 86.7 US cents

UPDATE: July 2014 par value is 93.9 US cents.

 

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