Foreign currency exchanges could be “crushed” if oil prices fall, according to the head of Australia’s central bank.
The Australian dollar, the global reserve, has hit its lowest level since December, after falling by more than half this year as global producers pulled back on output.
But the price of Brent crude, the world’s most traded commodity, is currently hovering around $115 per barrel, down from about $132 last month.
AAP: Aaron Blake Foreign currency markets are not the only places to suffer.
With oil prices hovering near record highs, some investors are now questioning whether Australia is the right place for them to cash out.
While the world is seeing an oil price crash, many Australians have been looking to their overseas holdings to cover their expenses.
So far, foreign exchange investors have been willing to spend their money overseas.
“For me, it’s more a case of I’ve seen the volatility that I need to look at and if that’s a good place for me to put my money,” said one buyer from New Zealand, who asked to be identified as Peter.
Peter is an oil trader who has set up an investment fund in New Zealand with his wife, who is an investment banker at the Bank of New Zealand.
They are expecting their first child in December and are worried about how the global oil price will affect their financial wellbeing.
It’s not the first time Peter has been thinking about the possibility of his investments being wiped out by the downturn in the global economy.
In June, Peter told the ABC he had been thinking of buying some Australian shares as well as overseas shares.
At the time, Peter said he expected the stock market to remain stable, but he would need to sell some of his overseas shares to cover his overseas expenses.
“That’s the one thing that really scares me,” he said.
“If it goes south, I don’t know what the world will look like.
We’ll be in financial chaos.”
Peter, who said he had only made a small number of investments in the past few years, said he was concerned about the global financial landscape.
He is currently considering selling some of the shares he bought in Australia and is planning to sell more of his holdings overseas.
Peter said he and his wife are expecting the first child this year and were not sure how the international financial landscape would impact their financial situation.
If the world goes down, then there will be huge ramifications for the family.
I am not sure if my investment in Australia is a good investment at the moment,” he added.
His concern about the stock markets in general and the Australian economy specifically was echoed by a number of foreign exchange brokers.
Foreign exchange broker Michael Purdon said that if the global economic downturn does not improve soon, the Australian dollar will be a “giant sinkhole”.”
It’s hard to get out of the hole that the US is in and the euro is in,” he told the BBC.
There is a huge amount of money in these markets.
And it is difficult to see how the Australian Government could make the best use of it all.
Purdon added that Australia could lose a lot of money because the foreign exchange markets were a good “guinea pig” for the Australian Treasury to see what they might want to do.”
It doesn’t make sense to just put your money into Australian stock markets because we’ve got a big foreign exchange market and a lot more risk there,” he explained.
This is a very risky investment, he said, adding that he did not expect it to be easy to recover.”
There are a lot that you’re taking out in a short period of time, and you’re going to be able to recover your money.
“In a statement, Australia’s Bank of Queensland said foreign exchange traders had been in a “bizarrely tight” market for the past year, and that they were looking for ways to “enhance their portfolio”.”
We understand the importance of foreign currency markets for investors, and the Bank has taken the opportunity to work with our international exchange partners to enhance their capital allocation,” the statement said.
However, the statement did not specifically address the concerns about foreign exchange being wiped-out by oil prices, and instead emphasised the bank’s support to investors.
Australian Treasurer Scott Morrison has said that the world economy is in a very challenging situation, and he said that there is no reason for Australians to be putting their money into foreign exchange.
Prime Minister Tony Abbott has also stressed that the government would do whatever it takes to help the global recovery.
Abbott told the Federal Parliament that Australia will “fight tooth and nail” to ensure that its currency remains “valued” and that it has “a global voice” at the negotiating table.
According to a recent survey conducted by the Australian National University, foreign currency traders make up about 8 per cent of the Australian population