We all said $16 is too cheap, hoping for $20. Now look at the result if the A$ goes to $1.10 as I gave in the example, and as being reported as quite possible in the financial press. A takeover price of A$20 at an exchange rate of $0.90 turns into only A$16 at an exchange rate of $1.10. We will get less in a takeover than we expect, because the takeover will be priced in US$.
You might have to accept the $16 instead of $20 in the event of a large upward movement in the A$, which is what is being reported. This is an unavoidable impact of a rising currency. As a result, with less potential for upside, there may be less upwards pressure on the share price.
EXT Price at posting:
$9.94 Sentiment: Hold Disclosure: Held
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