MARKETS SPECTATOR: Early 90s flashback

Morgan Stanley says 'sell the Aussie', predicting the currency will fall to about US93 cents.

Can the Australian dollar get any love? No, it seems.

Morgan Stanley Wealth Management’s strategist Malcolm Wood reckons the Australian dollar will fall to about 93 cents against the US dollar. In a note titled 'Sell the Aussie', Wood recommends investors put more money into non-Australian stocks.

“A large proportion of Australian equities are relatively expensive and more volatile compared to developed peers,” Wood says.

“With falling commodity prices, slowing purchases of Australian government bonds, and narrowing interest rate spread differentials, we questioned the sustainability of the high Australian dollar.

"In our view, recent actions by the Reserve Bank and the relative deterioration of Australian fiscal strength can be catalysts for normalisation.”

At 1:58pm AEST the dollar was trading at US98.01 cents, according to ANZ.

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