Importers Struggling
Importers are struggling to cope with a weaker Australian dollar after the 11-month rally that drove it as high as 94 US cents came to an abrupt end.
Turmoil on international markets, triggered in large part by debt default fears for several European nations, has stoked global growth jitters. The Aussie dollar, tied closely to commodity prices, has taken a battering, losing more than 6 per cent in the past month, making it the third-worst performing major currency over the period.
Currency consultants say they have been flooded with queries from corporate clients seeking ways to limit the damage from a sinking dollar.
As recently as mid-January, the Aussie was buying 92.5 US cents. This morning, it touched as low as 86.15 US cents, and was recently trading at 86.5 US cents.
”Certainly you have significant concern from importers,” said HiFX senior consultant Thomas Averill. ”The Aussie has already moved significantly. And the previous drop from the July to September period is still in their minds.”
A falling dollar makes imports pricier for local businesses, cutting into profits of companies that have not hedged their exposure to a fluctuating currency.
The slumping dollar will add headwinds to a retail sector – purveyors of many of the imports – already squeezed by weak Christmas sales.
Tags: Aussie Dollar, Australian Dollar, Christmas Sales, Commodity Prices, Corporate Clients, currency, Debt Default, Fears, Global Growth, Importers, International Markets, Jitters, Local Businesses, Profits, Purveyors, Queries, Rally, Retail Sector, Senior Consultant, Turmoil
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