CBA Aussie Dollar Barometer reveals impact on SMEs
(29 August 2011 – Australia) Commonwealth Bank (CBA) released its Aussie Dollar Barometer last week, revealing a large impact on jobs from the high Australian dollar.
Importers are the most optimistic about the Australian dollar. The average importer expects the Australian dollar to peak at US$1.23 by the end of 2011.
The last time the Australian dollar reached US$1.23 was in 1976 – well before the Australian dollar was floated in 1983.
Exporters are the least optimistic about the Australian dollar. But exporters still expect the Australian dollar to peak at a new post float record of US$1.17 by the end of 2011.
The Barometer revealed the high Australian dollar is forcing some exporters to consider cutting jobs. About 54 percent of exporters surveyed said the high Australian dollar might force them to cut jobs, while about 42 percent of exporters said the dollar has had no effect on their workforce plans.
CBA said: "not surprisingly, the contrast between exporters and importers is stark. About 17 percent of importers said the high Australian dollar had encouraged them to plan to increase jobs.
"About 75 percent of importers say the Australian dollar has had no effect on workforce plans, very few importers said the high dollar would force job cuts."
The Barometer also revealed 30 percent of businesses that trade with annual turnover of A$150 500 million plan to cut jobs because of the high Australian dollar, by contrast, 19 percent of businesses that trade with annual turnover of A$5 25 million plan to cut jobs.
"Increases in currency exposure are an indicator of future business expansion. The August Aussie Dollar Barometer indicates most businesses expect to increase their US$ exposure in the next three months," the report said.
The Barometer reveals the size and intensity of currency trading activity by Australian businesses.
Exporters expect to trade currency about six times over the next quarter. The average trade size last quarter was A$171,200.
By contrast, importers expect to trade currency more frequently, about 18 times per quarter. The average trade size last quarter was small at A$28,800.
Businesses that both import and export expect to trade currency about eight times per quarter. The average trade size last quarter was at A$144,000.
Compared to past Barometer surveys, the August Barometer shows that more businesses plan to hedge their currency exposure, hedging currency exposure is a way of managing possible future adverse changes in the currency.
The Barometer revealed 68 percent of importers plan to hedge their USD exposure over the next three months, this predicted increase in hedging is a significant jump on the results one year ago when only 40 percent of importers planned to hedge their exposure.
Of those importers that plan to hedge, 64 percent of their exposure will be hedged, it appears that a growing number of importers are hedging their exposure in an attempt to lock in the benefits of the strong currency before a possible fall in the Australian dollar.
"By comparison, 53 percent of exporters plan to hedge their US$ exposure, a small increase compared to the April Barometer. However, of those exporters that plan to hedge, a large 74 percent of their exposure will be hedged.
"Businesses that both import and export remain the most willing to hedge their US$ exposure. The August Barometer revealed that 69 percent of these businesses plan to hedge, and 74 percent of their exposures will be hedged.
The last time the Australian dollar reached US$1.23 was in 1976 – well before the Australian dollar was floated in 1983.
Exporters are the least optimistic about the Australian dollar. But exporters still expect the Australian dollar to peak at a new post float record of US$1.17 by the end of 2011.
The Barometer revealed the high Australian dollar is forcing some exporters to consider cutting jobs. About 54 percent of exporters surveyed said the high Australian dollar might force them to cut jobs, while about 42 percent of exporters said the dollar has had no effect on their workforce plans.
CBA said: "not surprisingly, the contrast between exporters and importers is stark. About 17 percent of importers said the high Australian dollar had encouraged them to plan to increase jobs.
"About 75 percent of importers say the Australian dollar has had no effect on workforce plans, very few importers said the high dollar would force job cuts."
The Barometer also revealed 30 percent of businesses that trade with annual turnover of A$150 500 million plan to cut jobs because of the high Australian dollar, by contrast, 19 percent of businesses that trade with annual turnover of A$5 25 million plan to cut jobs.
"Increases in currency exposure are an indicator of future business expansion. The August Aussie Dollar Barometer indicates most businesses expect to increase their US$ exposure in the next three months," the report said.
The Barometer reveals the size and intensity of currency trading activity by Australian businesses.
Exporters expect to trade currency about six times over the next quarter. The average trade size last quarter was A$171,200.
By contrast, importers expect to trade currency more frequently, about 18 times per quarter. The average trade size last quarter was small at A$28,800.
Businesses that both import and export expect to trade currency about eight times per quarter. The average trade size last quarter was at A$144,000.
Compared to past Barometer surveys, the August Barometer shows that more businesses plan to hedge their currency exposure, hedging currency exposure is a way of managing possible future adverse changes in the currency.
The Barometer revealed 68 percent of importers plan to hedge their USD exposure over the next three months, this predicted increase in hedging is a significant jump on the results one year ago when only 40 percent of importers planned to hedge their exposure.
Of those importers that plan to hedge, 64 percent of their exposure will be hedged, it appears that a growing number of importers are hedging their exposure in an attempt to lock in the benefits of the strong currency before a possible fall in the Australian dollar.
"By comparison, 53 percent of exporters plan to hedge their US$ exposure, a small increase compared to the April Barometer. However, of those exporters that plan to hedge, a large 74 percent of their exposure will be hedged.
"Businesses that both import and export remain the most willing to hedge their US$ exposure. The August Barometer revealed that 69 percent of these businesses plan to hedge, and 74 percent of their exposures will be hedged.
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