The resilience shown by the Australian dollar in recent weeks will be short lived, according to Kerr Neilson, chief executive of Platinum International, one of the country’s largest globally invested managed funds.
While he said the current level could be a “natural fundamental level” for the value of the Aussie relative to its US counterpart over the longer term, an $A in the “low 60s” would be a more likely trading level in the next six to eight months.
Kerr has remained “long” US dollars in his portfolio for this reason. The fund will buy currencies to hedge the currency exposure it takes on in the various equity markets it invests.
…Since the Australian dollar has come down to reflect a level closer to its fundamental valuation, Platinum has taken on “some Australian-dollar exposure” – less than 10 per cent of the value of the portfolio, he said.
Mr Neilson added that he planned to take on more $A exposure as the currency moved lower as he expected.
Sounds like you’re late to the party, Kerr, you’re exposure should be a lot more than that. And we can see why. The Aussie is not at an equilibrium level now if you discount for the obvious risk of much lower commodity prices. Nor is it going to stop in the mid $60s.
Anyway, welcome aboard!
