If you thought you were too late to profit from the plummeting Australian dollar, I have good news for you. According to The Australian Financial Review, Citigroup believes we could have a currency worth just US 60 cents in the near future.
The Australian dollar was trading above parity with the US dollar as recently as May 2013, but has since fallen dramatically to just US72.3 cents today. That's largely due to a reduction in local interest rates, which have impacted the returns foreign investors can achieve locally, together with plummeting commodity prices, and concerns about China's economic growth prospects.
The same factors could play a key role in driving the dollar even lower, especially if the Reserve Bank of Australia does cut interest rates further, as many economists expect it to do.
At the same time, the US Federal Reserve is expected to begin hiking interest rates. This should act to strengthen the US greenback, resulting in further weakness for the Australian currency.
Although 59,000 individuals expressed their support for a stronger Australian dollar in a recent petition, calling for the dollar to be renamed "dollarydoos" (a reference from 'The Simpsons TV show), a weaker dollar is actually great for our economy. I outlined various reasons why that is in this recent article.
Indeed, there are plenty of ways to profit from a weaker Australian dollar, but I think one of the best ways could be to buy shares in Westfield Corp Ltd (ASX: WFD).
Most Australians are familiar with Westfield, being one of the biggest shopping centre brands in the country. However, Scentre Group Ltd (ASX: SCG) actually owns and operates the local stores; Westfield Corp only owns and operates Westfield-branded assets in the United States and the United Kingdom following a corporate restructure in 2014.
That means that Westfield Corp's earnings are generated entirely overseas. Thus, when the results are reported to the market, local investors benefit from the weaker exchange rate.
However, that's not the only reason to be bullish on the company. Westfield Corp is also focused on improving its "flagship" shopping malls, which typically generate greater returns than those it classifies as "regional" centres. The centres should also benefit as those economies continue to recover and as consumer confidence improves.
Right now, the shares are fetching $9.94, down from a high of $10.66, and offer a reasonable 3.5% dividend yield.
