Watch out for the currency wars

Investors will have to take greater account of currency movements when planning their next move.

Developed markets, including Australia, have gained economic momentum and are expected to be the dominant share market performers over the coming year. However, when it comes to equity markets, it is eventually going to be a matter of separating currency devaluation from actual earnings improvement.

The Australian dollar has slipped 1.8 per cent since last Wednesday following Glenn Stevens’ speech declaring the Reserve Bank would consider intervention to move the currency lower.

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