Views differ on dollar direction
NATIONAL Australia Bank is forecasting the Australian dollar to fall to US75c by the end of this year, providing some gradual relief from recent strength in the local currency.
The bank expects the Australian dollar to trade as low as US73c for most of next year.
In its latest Rural Commodities Wrap, the NAB has revised its short-term exchange rate forecasts higher than last month’s estimates by about US2c.
The bank said that at the start of August, its modelling suggested the fair value for the Australian currency was around US77.1c
“Now five weeks later, fair value sits at 0.792 and the fair value range is 0.765 to 0.818,” it said.
The NAB said the Australian dollar was likely to remain in the US78c to US80.5c range in the short term but was to fall progressively in the coming year.
The NAB’s forecast is in stark contrast to that of the Commonwealth Bank of Australia, which has tipped the Australian dollar to end this year at US80c and climb to US85c by December next year.
The differing forecasts come as the Australian dollar hit a two-year high of US81c last week.
NAB said the Australian dollar remained sensitive to bad news, such as domestic data or global risk sentiment, prompting the bank to lower its longer-term forecasts for the exchange rate.