After Reserve Bank of Australia (RBA) announced cut in benchmark interest rate by 25 basis points to 2.25% today, the Australian dollar declined sharply to 1.036 against Singapore dollar. (AUD$1 = S$1.036 at 2.00 pm). See chart below.
Australian dollar was at its highest at S$1.305 on 11 April 2013. Between then and now, Australian dollar lost 20.6%. See table below.
|28 Sep 2012||1.280||NA|
|11 Apr 2013||1.305||+1.9|
|27 Jan 2014||1.112||-14.7|
|8 Sep 2014||1.174||+5.5|
|19 Sep 2014||1.139||-2.9|
|26 Sep 2014||1.118||-1.8|
|3 Feb 2015||1.036||-7.3|
On 20 May 2013, I took delivery of A$ at exchange rate of S$1.275. The most recent rate was S$1.036. That was a decline of 18.7%. Based on yesterday’s AUD/SGD rate, my Aussie FD was down 16.2%. This was after Australian interest income was added to the investment. This is the risk of investing in foreign currencies.
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