The Australian dollar has surged to a three-year high against the US dollar, prompting investment strategists to suggest portfolio adjustments. According to Betashares investment strategist Hugh Lam, the Australian dollar’s gains are likely to continue. The Aussie dollar was last buying US69.98¢ after rising to a peak of US70.20¢.
Lam attributes the dollar’s strength to resilient global growth expectations, which are encouraging investors to seek opportunities outside the US. He also noted the US dollar faces weakening pressure amid policy uncertainty and renewed strength in the Japanese yen. Lam suggests the potential for coordinated currency intervention from the US and Japan could have broader ramifications for USD weakness, indicating a possible US preference for a weaker greenback.
Lam advises investors with exposure to US equities to consider currency hedging to mitigate the impact of ongoing volatility. He suggests it may also boost returns. This strategy aims to dampen the effects of currency fluctuations on investment performance.
Furthermore, Lam recommends investors consider non-US developed markets and emerging market equities. He argues these markets may offer stronger returns in Australian dollar terms, providing additional diversification benefits for portfolios.
