You’d be daft not to stack up on your favourite wine when the local grog shop had a special on, wouldn’t you?
And who hasn’t purchased half-price duty-free booze, simply because they were passing through customs?
If you’re sitting in Bali with some fellow bogans, it’s even harder to say no. Heck, what’s $2.80 for another large Bintang?
No, I don’t have an alcohol obsession. But I am sitting in Bali as I write this. And the “heck it’s cheap” factor is a constant here. This would include the bar bill for me and my bogan, pogan (a posh bogan), wogan (wog-bogan, my Portuguese colleague insists on being called) and grogan (growing-into-a-bogan) mates, if not for the quantum being consumed.
The fact that Bali – and pretty much everywhere actually – is cheap to travel to is predominantly a factor of the mightiness of our dollar. For years, the dollar has been floating higher than Cheech & Chong on a bender.
But in the last few weeks, it’s been wobbling. A simple tremor? Or is the ground about to open up and swallow it?
I wouldn’t have the foggiest. It could be about to go up. It could be about to go down.
I do understand something far more powerful. It’s the concept of “reversion to mean”. That’s where something that is too high, or too low, or above its “long-term” intrinsic value, or below, will eventually return to its average.
Remember those gloating English cricket fans during The Ashes in 2001-02? They had a ditty about getting three dollars for one of their pounds. Are they laughing now when they’re getting half that? They can’t afford to come here, so we don’t have to listen to them.
The long-term average of the Australian dollar is somewhere between $US0.65 and $US0.75.
It got as low as about $US0.47 in 2001 and as high as nearly $US1.10 in recent years. Anyone who doesn’t believe that the Australian dollar is above “par” at the moment is living in Neverland.
The dollar is not just for the world of high finance. It impacts on your life almost every day.
Petrol is cheaper because the Australian dollar is strong. If the dollar were sitting at $US0.70, we’d be filling up at closer to $2 a litre. Big-screen TVs are currently “stupendously” cheap. With a lower dollar, they’d be just “stupidly” cheap.
Anything that is imported will become more expensive, including foreign cars, food, computers, toys and clothes.
That’s out of your control.
What can you control? If the Aussie is about to “revert to mean”, how can you benefit from that? Even if it’s not about to revert to mean, how do you take advantage of the Aussie sitting at around parity with the US dollar.
Travel. Overseas. Now. (I’m practising what I preach.)
The strong dollar means that your hard-earned buys you more, better quality, care-free times overseas now than at pretty much any time in the last 25 years or so.
This is my fourth trip to Bali. All of them have been cheap. But the exchange rate has been wildly different each time. In 1998, it was about 6000 rupiah to the dollar. Six months later in early 1999, it was about 7500 rupiah. In 2010, it was around 8200 and in 2012, it has been around 9400.
Any inflation in pricing has been completely wiped out by our stronger dollar. It will be similar in most places Australians travel to.
Buying cheaper imported goods and cheaper overseas holidays are ways to take advantage of the strong dollar. (For investors, purchasing overseas assets with a strong dollar can also make sense, but get advice here.)
The Aussie will eventually revert to mean. It has to. And Australians really need our dollar to fall.
It’s as dangerous for the long-term health of the economy as a ride with a narcoleptic taxi driver.
If it’s cheap to travel overseas, then it’s expensive to travel to Australia. Australia’s tourism sector desperately wants a lower dollar. The same applies for anything Australia exports, particularly our farmers.
Is this the “last call for drinks” on the Australian dollar before it reverts to its mean? If it is, then consider taking advantage of it.
I don’t know. I don’t care. But hey, look at that! It’s Bintang’o’clock!