A recent research report from National Australia Bank Ltd. (ASX: NAB) reveals that its analysts expect the Australian dollar to weaken considerably against the U.S. dollar over the coming months if U.S. Federal Reserve continues to raise rates as expected.
I would have to agree with NAB on this one and believe the divergent monetary policies of the two nations makes the Australian dollar look reasonably overvalued at present.
Two shares which I expect could benefit greatly from a significant drop in the local currency are listed below.
Here's why I think they are worth considering today:
Mantra Group Ltd (ASX: MTR)
One of the biggest drivers of the Australian tourism boom has been a weaker currency. I believe an even weaker currency would make Australia a more affordable place to visit, potentially leading to an acceleration in visitor number growth. As this would be likely to lead to increased demand for accommodation, I believe Mantra group and its leading accommodation brands would be a big winner. Furthermore, as well as encouraging overseas visitors, a weaker currency could make it more expensive for Australians to travel abroad, resulting in an increase in domestic tourism and a further lift in demand for accommodation.
Treasury Wine Estates Ltd (ASX: TWE)
Thanks to the growing demand for its premium products from the Americas and Asia markets, approximately 76% of Treasury Wine's earnings before interest and tax is generated overseas now. Whilst the Chinese market has long been expected to be the key growth driver over the next few years, it is in fact the United States providing the company with the strongest growth. With sales growing at an explosive rate in the country, I think Treasury Wine Estates could be a big winner from a weaker Australian dollar.
