Importers exposed on outlook for AUD
(4 May 2010 – Australia) The majority of Australian importers and exporters expect the Australian dollar to continue its upward trend until the end of the year, according to a new report released today by the Commonwealth Bank.
The Commonwealth Bank Aussie Dollar Barometer, the research for which was undertaken by East & Partners, tracks medium-sized importers and exporters exposure to the Australian dollar, their expectations for the currency and hedging plans for managing foreign exchange risk.
The Barometer found that 74.3 per cent of importers and 73.5 per cent of exporters expect the Australian dollar to increase by December 2010. Of those businesses surveyed that both import and export, 76.3 per cent expect the Australian dollar will rise during the same period.
The Barometer also revealed 54 per cent of all business surveyed do not plan to hedge their exposure to the Australian dollar. Of the 38.8 per cent of importers that do plan to hedge, only 39.3 per cent of their exposure is planned to be hedged. Likewise, of the 49.2% of exporters that plan to hedge, 77.8 per cent of their exposure is planned to be hedged.
According to Joseph Capurso, Currency Strategist at the Commonwealth Bank, the fact that most importers surveyed expect the currency to rise over the next eight months is a concern, given the Bank’s forecast that the Australian dollar is likely to decline over the same period.
"While the Barometer reveals that most importers are working on the assumption of ongoing increases in the Aussie dollar over the year, it also shows importers plan to hedge only a small proportion of their exposure. This is interesting, because if our forecasts for a lower Aussie dollar are right, importers could leave themselves exposed to higher costs."
Robert De Luca, Executive General Manager of Corporate Financial Services at the Commonwealth Bank, said the Barometer offers importers and exporters an insight into what their competitors and our currency strategists are forecasting.
"The results of the Barometer highlight the differences in expectations between business owners and our currency strategists. The data suggests that many importers could be leaving themselves exposed to falls in the Australian dollar. Now may be the time for businesses to reassess their currency position, rather than leaving their business open to cost pressures down the track."
The Barometer found that 74.3 per cent of importers and 73.5 per cent of exporters expect the Australian dollar to increase by December 2010. Of those businesses surveyed that both import and export, 76.3 per cent expect the Australian dollar will rise during the same period.
The Barometer also revealed 54 per cent of all business surveyed do not plan to hedge their exposure to the Australian dollar. Of the 38.8 per cent of importers that do plan to hedge, only 39.3 per cent of their exposure is planned to be hedged. Likewise, of the 49.2% of exporters that plan to hedge, 77.8 per cent of their exposure is planned to be hedged.
According to Joseph Capurso, Currency Strategist at the Commonwealth Bank, the fact that most importers surveyed expect the currency to rise over the next eight months is a concern, given the Bank’s forecast that the Australian dollar is likely to decline over the same period.
"While the Barometer reveals that most importers are working on the assumption of ongoing increases in the Aussie dollar over the year, it also shows importers plan to hedge only a small proportion of their exposure. This is interesting, because if our forecasts for a lower Aussie dollar are right, importers could leave themselves exposed to higher costs."
Robert De Luca, Executive General Manager of Corporate Financial Services at the Commonwealth Bank, said the Barometer offers importers and exporters an insight into what their competitors and our currency strategists are forecasting.
"The results of the Barometer highlight the differences in expectations between business owners and our currency strategists. The data suggests that many importers could be leaving themselves exposed to falls in the Australian dollar. Now may be the time for businesses to reassess their currency position, rather than leaving their business open to cost pressures down the track."
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