Australian businesses, both small and large, have become adept at managing their exposure to the fluctuations of the Aussie dollar over the past 32 years since the float. They are, of course, supported by a whole industry of advisers selling currency hedging products from the banks to non-bank organisations like Western Union.
But as Martin Smith, East & Partners’ head of Markets Analysis, said in a release accompanying the results of a survey of 868 “actively importing and exporting firms” in the SME space said yesterday:
Australian importers and exporters actively hedging their FX exposure have demonstrated over an extended period of time that they are excellent currency risk managers
So the results of the latest annual survey showing where these businesses think the Aussie dollar will fall to are instructive. And just like the Reserve Bank, the respondents believe that the Aussie dollar will fall to 75 cents.
But they don’t think it is going to crash, with the survey showing that “importers and exporters predict the AUD/USD to remain near current levels at 0.781 before sliding to 0.749 by the end of Q1 2016.”
Interestingly importers, who benefit from the Aussie dollar being higher, see it holding stronger than exporters. That’s what behavioural finance guys would call a “bias”.
Either way a lower Aussie dollar, if that’s what Australia gets, is on balance good for the economy. as the RBA highlighted yesterday.