Aussie dollar hits high against the pound

British expats living in Australia and Aussies planning jaunts to the UK will be cheering this week as the dollar hit a high of 27 years against the pound. On Tuesday night, the Aussie dollar hit 67.96 pence, the highest it has been since 1985, and stayed close to that yesterday.

A major bonus for both Brits living ‘down under’ and Australians flying the kangaroo route, over the past three years the dollar to sterling exchange rate has almost doubled. Whether the cash will be spent shopping in London’s Oxford Street and downing pints in the pub, everyone exchanging the currency the right way will be getting more bang for their buck.

According to the Sydney Morning Herald, a night in the five-star Savoy hotel on London’s The Strand will now cost around $AUD 500 - half of what it would three years ago. Mike Hollows, trading director for HiFX, said the UK and Europe will both be very attractive for Australians right now.

The reason behind the sudden strength of the Aussie dollar is wrapped up in the economic turmoil currently being experienced within the eurozone. Because of the fairly high interest rates down under, many foreign traders have opted to convert their currencies into Aussie dollars in recent years.

With the highest in developed economies, Australia’s Reserve Bank’s current rate is 4.25 per cent. With interest set at zero per cent in the US and UK, for example, foreign investors will get more for their money if buying and selling in the Australian dollar.