Wishful Thinking? Exporters Say The AUD Will Fall Further Than Importers' Forecasts

Australian exporters are far more bearish than importers in their predictions of a falling AUD, an East & Partners survey has found.

The analyst firm surveyed 861 importing and exporting businesses for its latest quarterly Aussie Dollar Barometer – its first since the dollar dipped below parity in May.

Businesses’ forecasts were roughly in line with market expectations, with survey participants expecting the dollar to reach $US0.889 by the year’s end, compared to NAB’s prediction of $US0.86 and Westpac’s prediction of $US0.92.

“Importers and exporters are just as accurate about forecasting currency moves as financial institutions,” East’s head of markets analysis Lachlan Colquhoun told Business Insider.

Here’s what surveyed businesses expect:

AUD/USD
September 2013 0.915
December 2013 0.889
March 2014 0.878
June 2014 0.871

Pretty much everyone is expecting the AUD to fall as the Reserve Bank tries to steer the economy through the end of the mining boom. The only question is by how much.

Colquhoun said East’s Aussie Dollar Barometer had accurately predicted currency moves in recent years, because data came from “businesses at the complete coalface”.

However, he noted that exporters tended to be more bearish than importers. “Maybe it’s a case of wishful thinking,” he said.

Exporters benefit from a lower AUD because it makes their products cheaper for overseas buyers, or makes overseas sales worth more in the Australian currency. Conversely, a high AUD lets importers buy more for less.

By June 2014, importers expect the AUD to fall to $US0.882 while exporters forecast an exchange rate of $US0.855. Businesses that import and export goods forecast an exchange rate of $US0.869.

East’s survey involved micro businesses, SMEs and institutions from a range of sectors including energy, mining, consumer goods, agriculture and technology.

Surveyed businesses typically based their predictions on previous trading experiences, reading the financial press, customers and peers, Colquhoun said.

Now read: The Falling AUD Will Boost Bank Earnings: Moody’s

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