Importers benefiting from strong AUD plan to raise prices
The research found that:
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Importers are forecasting a 6.2 percent increase in their trading volumes in the coming quarter and are planning to raise their prices by 4.4 percent
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Exporters, by contrast, were forecasting a 2.6 percent decline in forward volume, and were planning to reduce their pricing by an average of 4.5 percent
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The pricing dichotomy was strongest in the Consumer, Retail and Healthcare sector where importers were looking to increase their prices by 6.1 percent and exporters reduce their’s by 8.5 percent
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Larger exporters – or those organisations with annual turnovers of $500 million plus - were an exception to this trend, and were looking for a 4.4 percent climb in volumes, even though they were also planning to cut their prices – in their industry segment - by 3.2 percent
- The Industrials, Metals and Mining sector constitutes the strongest outlook growth for both export and import volumes, with an inverse result as exporters forecast an 8.3 percent increase in volumes, with importers forecasting a more modest 4.1 percent increase
"The results are a stark illustration of the bipolar impact of the high dollar and the impact it is continuing to have on business," said Ashley Bakes, Senior Vice President of Treasury and Trade Solutions for Citi. "And while it is logical for exporters to lower prices in order to make themselves competitive, the intention for importers – who are already advantaged by the currency – to increase prices is an insight.
"Perhaps they are playing catch-up after the global financial crisis, or see that the market will tolerate price hikes, but either way it re-inforces the fact that importers see themselves very much in a position of strength at the moment."The research also underlined the increasing importance of the Chinese RMB to exporters and importers, with forward RMB engagement growing at twice the rate of $USD engagement.
This is particularly apparent among the larger institutional segment, where respondents forecast an 18 percent rise in RMB engagement over the coming quarter.
Also in strong demand is the New Zealand dollar, which posted the third largest currency growth outlook, reflecting the strong growth in Trans-Tasman trade and the renewed momentum for Australian corporate, especially manufacturers, to re-invest in the lower cost Kiwi environment.
About the Citi Australian Trade Finance Index
Owners of the trade finance relationship in 863 corporates were interviewed in October 2013, with majority of them either Corporate or Group Treasurers (46.8 percent) or Trade Officers (40.9 percent). Of the sample, 31.1 percent were from the SME segments (A$25-A$150 million annual turnover), 33.8 percent were corporates (A$150-A$500 million) and 35.1 percent were institutions with annual turnover of more than A$500 million. For a complete understanding of the survey results, please refer to the full report. Citi is not responsible for any losses arising from the usage of the information contained or extracted from the report.
About Citi
Citi, the leading global bank, has approximately 200 million customer accounts and does business in more than 160 countries and jurisdictions. Citi provides consumers, corporations, governments and institutions with a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, transaction services, and wealth management. In Australia, Citi serves over 1 million customer accounts and 1,000 corporate accounts. It has the most comprehensive offering and largest global reach of any bank with operations in Australia.
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About Citi Transaction Services
Citi Transaction Services, a division of Citi’s Institutional Clients Group, offers integrated cash management, trade, and securities and fund services to multinational corporations, financial institutions and public sector organizations around the world. With a network that spans more than 95 countries, Citi’s Transaction Services supports over 65,000 clients. As of the third quarter of 2012, it held on average $415 billion in liability balances and $12.8 trillion in assets under custody.
About East & Partners
East & Partners is Asia-Pacific’s leading specialist business banking market research and analysis firm. East & Partners delivers both bespoke and multi-client research programs and consulting services to client banks and financial services providers across the institutional, corporate, SME, business, investment and financial services markets.
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