With Australia having sworn in its sixth Prime Minister in just eight years, foreign currency experts Travel Money Oz has opened the history books to reveal how it may impact the Australian dollar.
“It is interesting to look back at the first Australian Labor Party spill when Julia Gillard replaced Kevin Rudd on the 24th of June 2010,” said General Manager for Travel Money Group, Kelly Spencer.
“The week leading up to this, the AUD was experiencing a small amount of growth, but as speculation began to circulate and Gillard announced her challenge on the 23th of June, the dollar began to fall.
“By the time Rudd was replaced the dollar had steadied back to its original figure,’’ Ms Spencer said.
Fast-forward two years, and Rudd was attempting to make a comeback against Gillard. On the 23rd of February 2012, Gillard announced a ballot for leadership of the ALP. The next day, Rudd announced his intention to stand against Gillard and, on the 27th of February 2012, the ballot found Gillard victorious in a 71-31 win.
“During this time, the Aussie dollar was performing strongly against the USD, and this wasn’t slowed down by Gillard’s win, which increased the dollar by 0.006282.
“The following day the dollar experienced a small degree of growth,’’ Ms Spencer said.
Unfortunately for Gillard, the winning streak didn’t hold out for her third leadership challenge. On the 26th of June 2013, she was defeated, and Rudd was sworn in the following day.
“The Aussie dollar acted in a similar way to the last time a PM was defeated in a ballot. The AUD had been experiencing some steady growth of 0.008971 in the five days prior, but the day of the ballot and the next day saw the dollar weaken substantially to 0.916364,’’ she said.
Next came the leadership challenge between Tony Abbott and Malcolm Turnbull when on the 14th of September 2015, Abbott was defeated in a vote for Liberal leadership 54 to 44.
“During the week leading up to this event, the dollar had been growing. On the day Abbott got the boot, the dollar also experienced some growth,’’ Ms Spencer said.
However, the next day while Turnbull being sworn in, the dollar dropped. Despite this, the following day the dollar had strengthened again.
“We are now set to see history repeat itself with Scott Morrison scoring a shock victory in a messy spill against sitting PM Malcolm Turnbull which also featured Peter Dutton and Julie Bishop in the running.
“Past history suggests that the dollar may continue to fall as it has since the 22nd of August.”
Travel Money Oz says these examples highlighted the many factors contributing to foreign exchange rate fluctuations.
“For those going overseas any time soon, we recommend keeping an eye on the market and buying your foreign exchange when you’re ready,’’ Ms Spencer said.
“Remember that there are various options available such as pre-paid travel money cards, where travellers can lock in an exchange rate the day they load.
“Travel Money Oz also offers Rate Guard on certain foreign cash purchases, meaning if the rate changes 14 days within your buying period, we will credit you the difference,’’ she said.
It is also worth looking to our friends in America to analyse the impacts of a serious scandal on the strength of the dollar.
For two months, until its conclusion on the 12th of February 1999, American politics was focused on the impeachment of Bill Clinton. Clinton was charged based on perjury and obstructing justice over some girl named Monica Lewinsky.
“The American market had a surprising reaction to these scandals,’’ Ms Spencer said.
“While stocks initially fell, they climbed thereafter until the conclusion of the impeachment. However, if Trump goes through a similar ordeal, history is not expected to repeat itself.
“Therefore, if Trump gets in trouble, it might be a great time to stock up on some USD,’’ she said.
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