Are you planning on travelling this year? If so, it’s more likely than not you’ll be dealing with foreign currency, be that greenbacks in the US, rands in South Africa, or even neuvo sols in Peru. Given this, what happens to the foreign exchange rate this year will mean the difference between whether you end up with a large pile of bank notes, or just a few coppers. So what do the forex Gods have in mind? I spoke with Peter Lavelle of foreign exchange specialist Pure FX, to determine the currencies of interest in 2014.
1. UK (pound sterling)
If the idea of a road trip through Southern England appeals to you, you’ll be needing British pound sterling. Be warned, however, that you may be better off buying your quid sooner rather than later, because the currency is set to become much more costly in 2014. Why? Well, for the simple fact that, at present, Britain’s economy is growing faster than any other country in the Western world. And that’s put a fire up the pound like spinach to Popeye. So if the UK is your destination of choice for 2014, the sooner you buy your pounds the better!
2. USA (US dollar)
If a trip to New York City or Chicago is what takes your fancy, then the mighty US dollar will be lining your wallet in 2014. However, as with the British pound, you may find you’re better off buying your greenbacks double post-haste, because the US dollar is set to rocket in value next year. How come? Well, it’s because since 2012, the Federal Reserve has been printing $85 BILLION a month to shore up America’s economy, which has had the side-effect of weakening the buck. However, now the US economy looks healthier, the Fed may end its stimulus, which will give the buck an almighty lift.
3. The Eurozone (euros)
Like the idea of seeing the City of Lights in 2014? Then you’ll be needing euros, the currency of 17 European nations. Fortunately, there’s no need to rush to the bureau de change if you need euros, because the currency could well get cheaper in 2014, which means you’ll get more of them. Why is the euro set to weaken? Because, in economic terms, the Eurozone is still stuck in bed with a bad case of the flu. In fact, it’s even possible the currency bloc will be struck by deflation, which means prices will FALL on an ongoing basis. All of which is kryptonite for the euro!
4. Australia (AU dollar)
Going Down Under? Well, good news, because the Australian dollar may very well plunge in 2014, meaning you’ll get far more of the world’s most colourful bank notes (not to mention a $1 coin that features images of kangaroos!) Why will you get more Aussie dollars? Because Australia’s economy is stuck down a well at the moment, having grown well below its normal pace in 2013. Moreover, the mining boom that’s fuelled Australia’s growth since the global financial crash now looks petered out.
5. New Zealand (NZ dollar)
See the Hobbit and been inspired by the landscapes? If visiting the land of The Lord of The Rings is what you’d like to do next year, you should be aware however that the kiwi dollar may very well rocket in value in 2014, making New Zealand a costlier destination. It’s because New Zealand is exporting an absolute truckload of dairy products to China, which is sending its economy flying. That, plus the reconstruction of Canterbury, New Zealand’s 2nd largest city, have placed the country in the economic fast lane, and the kiwi dollar too.
6. Canada (CA dollar)
You’d be crazy not to visit Canada next year! This is because the loonie (as the Canadian dollar is known among Canucks) has absolutely plunged in value in 2013, and looks set to continue doing so. This means, when you buy Canadian dollars, you’ll get a whole lot more of them. The Canadian dollar is losing out, chiefly because Canada faces several economic headaches. For one, Canadian shoppers are indebted up to their eyeballs. For two, Canadian oil (which is Canada’s biggest export, by the way) sells far more cheaply than that produced elsewhere. So, wait before you buy your loonies!
To get a great foreign exchange rate when you transfer money abroad, and support Confiscated Toothpaste at the same time, click here for a free quote. And please bear in mind these predictions are just a guide only and NOT meant to constitute actual financial advice!