Businesses are becoming accustomed to the high Australian dollar and may view any further dips as lucrative opportunities, rather than a sign the economy is reverting back to pre-financial crisis conditions, the latest CommSec Aussie Dollar Barometer reveals.
The survey, which is released each quarter and surveys nearly 900 businesses turning over more than $5 million a year, found businesses expected the dollar to depreciate this year but mostly retain its strength through to December.
Businesses making over $500 million expect the dollar to be at $US1.06 at the end of the year, and continue above $US1.02 next year.
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Commonwealth Bank economist Chris Tennent-Brown told SmartCompany this forecast is closer to the bank’s own predictions, and indicates that businesses are beginning to view current conditions as permanent.
“That’s encouraging to see, that the idea of a strong dollar is sinking in across the board – it means that companies are working out ways of dealing with it.”
“It’s encouraging to see this is just part of the environment rather than just hope it’ll depreciate back to previous levels. They’re working out how to do business.”
The barometer found 80% of importers plan to hedge their exposure to the US dollar over the next three months, compared to just 43% two years ago. And 60% of exporters plan to hedge as well.
These firms also said they plan to boost productivity in light of current conditions, but it comes at a cost – exporters made up the largest group expecting to cut the size of their workforces.
However, 11.5% said they plan to increase offshore operations.
Importers expect the dollar to be at $US1.06 by the end of the year, although exporters think it will be slightly less at $US1.04.
Tennent-Brown says it’s encouraging businesses don’t believe the dollar will fall any time soon, as it suggests when the currency does fall entrepreneurs will be keener to take advantages of those brief windows.
“Hopefully, importers won’t get too greedy and keeping hanging out for $1.10, and likewise exporters will see these dips towards parity as reasonable opportunities rather than optimistically hoping we get back down to 90 cents.
“Businesses may think the dollar will head back down to 85 cents – but we would think that’s a bad strategy based on our own forecasts.”