Banking News

Businesses expect AUD to decline against USD over next year

(21 August 2013 – Australia) The latest Commonwealth Bank Aussie Dollar Barometer, conducted by industry analyst East & Partners, has revealed that both importers and exporters are expecting the AUD to decline against the United States dollar over the next year.

In contrast, the previous quarter’s survey showed businesses expected the AUD to appreciate against the USD in 2013.

The latest Barometer was conducted between 13 and 17 May, and showed the outlook for steady depreciation in AUD/USD is similar to the outlook expressed in earlier versions of the survey.

Over the latest quarter, the AUD/USD eased from $1.00 to close to $0.97, following a decline of 5.5 percent from its mid-April peak of $1.06.

Importers were the most optimistic about the strength of the AUD in the latest Barometer, expecting the least amount of depreciation out of the groups surveyed.

Importers expect AUD/USD to be trading around $0.96 in March 2014.

Exporters have slightly lower expectations for the value of the AUD, and expect the AUD to trade around $0.93 in March 2014.

Businesses with annual turnover of A$500 million or more continue to have the highest AUD/USD forecasts.

However, all predictions, irrespective of business size expect the AUD to decline over the year. Businesses with annual turnover of A$500 million or more expect AUD/USD to be around $0.96 in March 2014, whereas smaller businesses with turnover under A$150 million expect a lower AUD/USD of around $0.93 $0.94.

Predictions about the AUD/USD also vary by sector, but all business sectors expect the AUD/USD to decline over the year, regardless of size or business type.

Respondents to the survey were also asked about the appreciation in AUD and Japanese Yen (JPY) that has occurred since late 2012 and how it has impacted their businesses.

Around 17 percent of all businesses surveyed said the AUD/JPY appreciated had a positive impact, this percentage of businesses were either importers or involved in both importing and exporting.

In contrast, 12 percent of businesses said the AUD/JPY rise had a negative impact on their business – almost all were exporters.

For the latest Aussie Dollar Barometer, businesses were asked if they buy, sell or have two-way trade with China.

It was found that of those surveyed some 34 percent buy from China-based companies; while 17 percent of businesses indicated they sell to China-based companies; a total of 14 percent of those businesses surveyed have two-way trade with China.

China is Australia’s main trading partner. Australia sends around 30% of exports to China, and nearly 20% of Australia’s total imports come from China. Because of these trade ties, we will continue to ask this question in future surveys in order to monitor developments.