Overseas interest rate hikes could hit Aussie investment market

28 November 2014
| By Nicholas |
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Forecast interest rate increases in the US and UK allied to a weakening Australian dollar could see a "rush of capital out of Australia", Australian Unity Investments chief executive, David Bryant believes.

Bryant said foreign investors had been "chasing Australian interest rates," which have remained high by global standards in recent years, but the combination of higher interest rates overseas and weakening value of the Australian dollar was likely to prompt investors to look elsewhere.

"The Australian dollar has already dropped to a four-year low and more downside is likely. I wouldn't be surprised to see it go below 80 US cents in the near future," he said.

"Added to the fact that both the US and UK have interest rate increases on the horizon, the probability is that capital will be looking for other homes.

"Once the interest rate differential shrinks — which will happen sooner rather than later — that foreign capital will flow out in in rush."

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