The Australian dollar is riding high, but those intending to head off to the northern hemisphere should change their dollars now before the Aussie dollar resumes its downward trend, analysts say.
One Australian dollar is buying almost US80¢, an 11-month high against the greenback. Admittedly, that is nothing compared with 2011 and 2012 when one Australian dollar bought one US dollar.
But it is a significant improvement from the start of this year when our dollar was buying about US70c.
Stephanie Bateman, 28, a social media professional from Melbourne, is heading off to the United States for three weeks in September.
"I'm constantly monitoring what our dollar is doing," Stephanie says.
She went to the US in 2012 when our dollar was buying one US dollar. "It was incredible, but it is really different this time," she says.
Because the exchange rate is not as good, Stephanie has decided to reduce the time she will spend in the US.
Stephanie has a travel card and her strategy is to try to pre-pay for as many as possible of the major expenses, such as hotels, while the exchange rate is relatively good.
She does not like the high interest costs and charges on credit cards and so tries to avoid using her credit card when overseas.
Stephanie has started putting US dollars onto her travel card now because she does not think the relatively good exchange rate will last.
"Some people like to wait in the hope that it [the exchange rate] will improve, but it's not worth the risk," Stephanie says.
Australian travellers to Britain are also getting more for their dollars.
Our dollar buys about 54p – an 18-month high. And our dollar is buying almost €0.70, the best rate in about a year.
Matthew Sherwood, head of investment strategy, multi-asset, at Perpetual Investments, says intending international travellers should be looking at locking in the good rates now.
The Australian dollar is having a good run, but Sherwood does not think there is much more "upside" to our currency.
One of the biggest factors determining currency exchange rates is differences in interest rates.
Australia's official cash rate is 2 per cent. Even though that is a record-low for Australia, it is one of the highest in the developed world and much higher than rates in Britain, the US and the eurozone.
Australia's higher interest rates and a bounce in commodity prices are attracting overseas investors to Australian investments.
Foreign investors have to buy Australian dollars with their US dollars, euros and pounds, which pushes the value of the Australian dollar higher.
Sherwood says the end of the rally in the Australian dollar is very likely to come when markets believe the US central bank, the Federal Reserve, is about to increase interest rates.
Any further cuts to interest rates by the Reserve Bank of Australia would be a negative for the Australian dollar.
Richard Grace, chief currency strategist and head of international economics at the Commonwealth Bank, says intending travellers should take advantage of the good exchange rates now.
He expects our dollar to stay at present levels of almost US80¢. But he warns if the US Federal Reserve lifts rates our dollar could fall to US75¢.
The experts agree there is probably not so much of a rush to buy pounds as there is to lock in the US dollar exchange rate.
Matt Richardson, corporate foreign exchange dealer at OFX, formerly OzForex, is expecting the value of the Australian dollar to move higher against the pound.
The pound is expected to further weaken in the lead-up to the "Brexit" referendum on June 23, when Britons will vote on whether to remain or leave the European Union.
If the "remain" side wins, the pound is expected to rise a little.
However, Richard Grace says there are other factors that are likely to help keep the pound lower for longer.
One is that Britain has a record current account deficit and must borrow from foreigners to make-up the deficit, which puts downward pressure on the pound.
Australia has a current account deficit also. However, this is outweighed by the much higher Australian interest rates, Grace says.
He thinks the Australian dollar will rise a "bit further" against the pound and could hit 57p by the middle of next year.
The gains of the Australian dollar against the euro have been much more modest than those against the US dollar and the pound.
The euro has been holding its value better than the US dollar and the pound.
Grace says that is mostly because Europe's economy is improving and the eurozone has a current account surplus and is attracting US-dollar investors.
Overseas investment
Grace says investors with foreign investments should not be too concerned about the rising Australian dollar.
A rising Australian dollar detracts from the returns of overseas investments just as a falling Australian dollar adds to returns.
Those investors with foreign investments should only be concerned by our dollar's strength if they are thinking of selling, Grace says. It they are able, they should wait until the Australian dollar weakens before selling.
For long-term investors, the fluctuations in currency exchange rates tend to even out, Grace says.
Shane Oliver, the chief economist at AMP Capital Investors, believes the rally is only temporary and that there will be a resumption of the downward trend in the Australian dollar.
Investors stand to benefit over the longer term from continuing to hold their foreign investments, he says.
Our big miners are being hurt by our stronger dollar as they tend to have much of their revenue in US dollars.
Matthew Sherwood point out, however, the rise in commodities' prices means higher revenue for the miners, which helps offset the negatives of a stronger Australian dollar.
"I would not be putting any trades in the resources sector based on a currency view," Sherwood says.
Investors should be looking at the strength of a company's balance sheet and quality of its management; factors that are much more important to the performance of the investment, Sherwood says.
Twitter: @jcollett_money
