If you decide to take the plunge and study at abroad, be prepared for how currency movements will affect your international school fees. World First Chief Economist, Jeremy Cook, walks us through how the FX markets could affect UK students studying in the universities on our World First international student rankings.
- AUSTRALIAN NATIONAL UNIVERSITY
GBP is down by 11.59% since Brexit against the AUD.
The AUD has done relatively well this year so UK students will feel the pinch of international school fees in Australia. A rebound in commodity prices has kept Australia’s export revenues buoyant whilst cuts in global interest rates have kept the AUD in demand due to its comparatively higher central bank rate. The balance of averages moving forward however is that we see some of this overvaluation in AUD slide out of the price as inflation locally remains weak and political pressures elsewhere limit investor appetite for risk.
- ETH ZURICH (SWISS FEDERAL INSTITUTE OF TECHNOLOGY)
GBP is down 8.82% since Brexit against the CHF
The Swiss franc has maintained its reputation as a quiet currency through most of this year and ever since the Swiss National Bank let the CHF freely float back in 2015, it has operated in a rather predictable range. For clues on what happens in Switzerland we must look at what happens in Europe and through the European Central Bank. If the euro strengthens, via higher growth and/or diminished political risk, then higher inflation in the Swiss franc should allow for CHF weakness. Inflation pressures are notoriously difficult to build at the moment however.
- MCGILL UNIVERSITY
GBP is down 10.1% since Brexit against the CAD
As oil goes, so does the Canadian dollar. Global oil prices have rebounded this year as demand dynamics continue to look improve; Asian demand has improved but supply issues will keep the price from heading too much higher than $55 a barrel. A lot of how the CAD will perform in the coming months will be how well the economy recovers following the Ft McMurray fires and their impact on oil production. The Bank of Canada is forecasting a strong bounce back and any disappointment will hurt the Canadian currency in late 2016.
- UNIVERSITY OF MICHIGAN or HARVARD UNIVERSITY
GBP is down 11% since Brexit against the USD
We see the Fed raising rates by the end of this year meaning international school fees in dollars will be significantly higher for overseas students. Rate expectations in a post-Brexit world are a difficult beast. Markets are currently only pricing in 15bps of hikes from the Federal Reserve in the next 12 months; a number that looks surprisingly low given the recent run of strong US data. Ahead of the US elections, predictions are relatively useless although we believe Clinton would likely see a stable to weak USD as flows to emerging markets increase on improved risk sentiment. We believe a Trump win would promote USD strength after an initial knee-jerk lower however.
- ECOLE POLYTECHNIQUE PARISTECH
GBP is down 9.21% since Brexit against the EUR
We are still waiting on the Brexit impact on the UK let alone on the Eurozone as a whole. If there is a Brexit impact later on down the line it’s likely to first manifest itself in the political scenarios that we see play out in the Eurozone over the course of the next year or so, be that the Italian elections, the Dutch, the French or the German elections in the late part of next year. And that could start to see a fall-off in investment spending, as well as a fall-off in consumer confidence and capital expenditure of businesses. These could all weigh on the Euro moving forward.
- TSINGHUA UNIVERSITY
GBP is down 8.59% since Brexit against the CNY
We haven’t heard much from China this year, in fact with the markets focused almost exclusively of political dealings in the developed world issues in China have been largely ignored for a while now. We are almost entirely in the dark as to how well the Chinese economy is growing at the moment. We are of the opinion that it is not just us who doesn’t know where Chinese GDP is; we doubt the Chinese authorities really have an idea of what is going on. In a period of weak global demand we expect that policymakers will want to keep the Chinese Yuan weak but stable.
- KAIST – KOREA ADVANCED INSTITUTE OF SCIENCE AND TECHNOLOGY
GBP is down 15.54% since Brexit against the KRW
As it has been in other emerging markets, despite the volatility elsewhere it has been a good year to hold on to the South Korean Won. The key to how well it performs moving forward depends on the local and global fall out of the Hanjin shipping company bankruptcy. This will show up in manufacturing sectors in the coming months should commodity supply be disrupted. This would likely end flows into emerging markets in favour of safer assets. Students paying international school fees in South Korea should consider speaking to a specialist broker to get the most out of a strong Won.
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