Another day, another increase in the value of the Australian dollar against the faltering Greenback. The local currency is now just under US97 cents, just below the high of US97.92 cents in July 2008 and with further weakness in the US dollar likely, parity between the US and Australian currency looms as a distinct possibility.
Yesterday we looked at 10 ways you can take advantage of the high Australian dollar. But entrepreneurs also need to realise that the movement in the currency could have a big impact on the performance of their customers.
With that in mind, here is our special sector-by-sector guide.
The impact on this sector will be fairly limited, although agencies will need to be aware that advertisers with overseas parent companies will find their advertising spend is not going as far as it once did.
Both a winner and a loser. While exporters will find it tougher to sell overseas, raw material costs and equipment costs (most of which are worked out in US dollars) will fall.
Little impact, as demand is driven mainly by domestic customers in the mining and infrastructure sectors. May find it cheaper to buy equipment and other materials, and could even find it easier to attract workers from overseas.
No huge impacts, although those focused on US equity markets will see their returns clipped.
A loser, mainly because many Australian health companies are big exporters to the US. Prominent examples of companies that will see earnings under pressure include Cochlear, CSL and Resmed.
A winner. Australia imports most of its IT products, so a rising US dollar should help bring down costs and stimulate sales.
Exporters will be hurt by the rising dollar, but given most manufacturers import raw materials from overseas or outsource production to China (where the US dollar is the main currency for business transactions) the sector should enjoy some positive benefits.
No real impact, although it will possibly become cheaper to buy overseas content.
Another industry that is mainly focused on the domestic market, so there should be little impact. However, firms that work for overseas companies could find client budgets have been trimmed to some extent.
No particular impact, although overseas buyers may be less willing to look at Australia.
Given export contracts are in US dollars, there will be some impact on this sector. However, rising commodity prices will dull or eliminate most of the pain.
A winner. The rising dollar should help further reduce the cost of imported consumer goods. This could even help retailers restore their discount-ravaged markets.
Should be a winner, particularly where telecommunications equipment and services are bought in from overseas.
A big loser. Australia is having enough trouble attracting tourists from downturn-hit economies such as the US, Europe and Japan – a soaring Australian dollar makes this even harder.
A big winner. Falling fuel costs will help airlines, transport companies and other industry players.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
