Looking Ahead: AUD to INR Forecast

Overview

Australia took an approach to its exchange rate policy that set it apart from developed economies. After adopting a floating exchange rate, Australia gradually shifted towards a more flexible system. The significant turning point came in 1983, when the Australian dollar started to float and capital controls were lifted. Alongside this change, there were financial market reforms that helped boost the internationalization of the dollar over the past 25 years. This flexible exchange rate played a role in safeguarding the economy against shocks, especially sudden and drastic shifts in trade terms. Australia managed to absorb these shocks without succumbing to inflation or deflation pressures that had been common under fixed or managed exchange rate regimes. As a result, this contributed greatly to the stability and resilience of the economy.

Economic Factors Influencing the AUD to INR Exchange Rate

The global economy is anticipated to experience a period of growth over the next couple of years due to the ongoing impact of tighter monetary policies. The recovery of Australia’s trading partners in China has been slower than initially projected after the COVID-19 pandemic. Within Australia, economic activity is expected to remain sluggish throughout the remainder of this year due to cost of living pressures and higher interest rates. There is optimism that things will gradually improve as these challenges ease and people’s incomes start to rise. In regards to employment, which has been fiercely competitive, there is a prediction that the job market will loosen up over the years. This could result in higher levels of unemployment and underemployment due to growth. It is expected that inflation or price increases will decrease to around 3 1⁄4 percent by the end of 2024 and eventually return to the desired range of 2–3 percent by 2025. The decline in prices mainly affects goods. It is anticipated that electricity costs will rise while service prices are likely to remain high. It’s essential to note that there are uncertainties within the country that could potentially impact these forecasts.

AUD to INR Forecast: Impact of Global Market on AUD

The global economy is currently facing a number of challenges, including:

• Rising inflation
• Higher interest rates
• The war in Ukraine
• The slowdown in China’s economy

The AUD is greatly influenced by market dynamics. Australia, being an exporter of commodities like iron ore and natural gas, experiences fluctuations in its currency value based on trends. At present, several key factors are impacting the AUD. Firstly, there is an increase in inflation, which makes currencies, particularly the US dollar, more appealing to investors. As a result, people are selling off the AUD. The US is rapidly raising its interest rates to combat inflation, further enhancing the attractiveness of the US dollar and causing a decline in the value of the AUD. The ongoing conflict in Ukraine has created uncertainty. Disrupted supply chains, negatively impacting the economy and consequently affecting the AUD. Furthermore, China’s economic slowdown raises concerns about reduced demand for goods and puts pressure on the AUD. All these global occurrences contribute to fluctuations in the value of the AUD.

Expected AUD to INR exchange rates for the coming 4 months:

December 2023: 54.50–55.50
January 2024: 54.00–55.00
February 2024: 53.50–54.50
March 2024: 53.00–54.00

Here are some of the factors that could affect the exchange rate between the AUD and INR:

• Relative economic growth: In this case, if Australia’s economic performance exceeds that of India, then most probably the AUD will appreciate against the INR.
• Interest rates: Raising rates within an environment of a weak Australian economy leads to an increase in the demand for the local currency within an international context as investors consider its stability and value.
• Inflation: The depreciation of AUD relative to IRN in Australia results from higher inflation in Australia compared to that in India.
• Commodity prices: Increases in the prices of commodities such as iron ore and coal lead to increases in the AUD.
• Political risk: Investors’ uncertainty may affect Indian politics, making it hard for investors to commit their resources. This will force the INR to weaken against the AUD.

Also read: How to transfer money from Australia to India

Political Factors Affecting The AUD

Australia’s political landscape currently reflects a sense of stability following the victory of the Labor Party in the election held in May 2022. This electoral outcome has been positively received by investors. The elected Labor government is now faced with the task of fulfilling its promises made during the election, particularly regarding reducing living costs and addressing climate change. Failing to meet these expectations could introduce increased uncertainty, which may have an impact on the AUD. It is worth noting that the government is actively investing in infrastructure and education to stimulate growth and enhance Australia’s appeal as a desirable place to live and work. These strategic initiatives are anticipated to provide long-term support for the AUD, strengthening the sentiment surrounding Australia’s economic trajectory.

Economic Conditions In Australia

• Australia’s total debt stands at $897 billion as of May 2023.
• The unemployment rate in Australia is presently at a low of 3.7%.
• Inflation in Australia for the June 2023 quarter sits at 6.0%, which is a decrease from the quarter’s rise of 7.0% in March 2023.

Significance Of Monetary Policy & Interest Rates On AUD

The Reserve Bank of Australia (RBA) employs a tool known as the cash rate to manage the economy. When they increase interest rates, it becomes more costly for individuals and businesses to borrow money, which slows down spending. This measure helps prevent prices from rising. Conversely, when interest rates are lowered, borrowing becomes cheaper, encouraging spending but also posing the risk of price increases. The strength of the AUD is influenced by these changes in interest rates. Following the RBA’s decision to raise cash rates in March, May and July 2023, the AUD gained strength. After the increase in March, it appreciated by over 2% against the US dollar, demonstrating how these actions impact currency values and reflect the RBA’s efforts to manage inflation effectively.

Forecast Of AUD to INR In 2023

The Australian dollar has experienced ups and downs throughout 2023. It started the year at 0.68 USD. Reached its point of 0.72 USD in late January. Since then, it has settled between the range of 0.64 and 0.66 USD. When compared to the euro, the Australian dollar has fluctuated between 0.59 and 0.66 EUR this year. Against the GBP, the AUD dropped to 0.50 GBP as of August 17, 2023, from a peak of 0.57 GBP in February. Although the dollar faced challenges in 2022, there is some optimism for the remainder of this year due to China’s anticipated pandemic reopening and its potential positive impact on the Australian dollar, which could lead to an increase in commodity prices. There are uncertainties looming over the economy. The possibility of interest rate hikes both in Australia and the US within the next six months raises concerns for observers. There is a sense of unease regarding a global recession that could further impact how the AUD performs for the rest of this year.

Also read: Sending Living expenses and Gift money to Australia from India

Why Choose moneyHOP?

HOPRemit by moneyHOP allows people, like students and professionals, to easily send money to Australia from India. Our goal is to make international money transfers more affordable by reducing fees and offering the industry’s best exchange rates. With our complete digital platform, we combine the convenience of fintech with the security you would expect from a bank, ensuring a reliable solution for all your international remittance needs.

Unparallelled Features That Make HOPRemit Promising:

• Best Exchange Rates: HOPRemit provides industry best exchange rates for currency conversions as compared to traditional banks & other cross-border players.
• No Hidden Charges: HOPRemit is committed to transparency and honesty in our dealings. No hidden fees or commissions are charged, so customers can rest assured that the amount they see at the time of the transaction is the exact amount that will be charged.
• Fast Processing Time: HOPRemit understands the importance of timely money transfers. While processing transactions quickly, usually within 48 hours, so that the money reaches the recipient as soon as possible.
• 24/7 Availability: HOPRemit operates round-the-clock, 365 days a year. Customers can access our services at any time of the day or night, regardless of their location.
• Freeze Exchange Rates for 24 Hours: HOPRemit offers the option to freeze exchange rates for up to 24 hours. This means that customers can lock in a favorable exchange rate and be certain that the amount they will receive at the time of the transaction will remain the same, regardless of any fluctuations in the market.

Summary

To summarize, the future of the AUD is closely connected to dynamic factors. The RBA has been gradually raising interest rates, which could attract investment and strengthen the AUD. There is a risk posed by rising inflation that surpasses the RBA’s target of 5.2%, as it can erode purchasing power and weaken the value of the AUD. The global economic landscape is uncertain, with a recession in 2023 that might impact demand for Australia’s exports and consequently influence the AUD. It is crucial to consider the resilience of sectors like mining, which accounts for 67% of exports. Agriculture (which accounts for 11.6% of exports) is vulnerable to commodity price fluctuations, climate change effects and controversies surrounding live animal exports. Ultimately, predicting the trajectory of the AUD relies on finding a balance between these economic forces. Around 8,06,000 Indians currently reside in Australia, making up 3% of the country’s population. In this context, moneyHOP plays a vital role by facilitating international money transfers to help support their families.  moneyHOP is a reliable partner offering international transfers to Australia with competitive rates and near-zero charges. This ensures that the financial and cultural ties between these two nations remain strong over time.