Importers Urged To Remain Proactive On Risk Mitigation As Dollar Hits Record Highs

Media Release:
12 April 2011

Importers Urged To Remain Proactive On Risk Mitigation  As Dollar Hits Record Highs

Travelex Global Business Payments, the world’s leading cross-border payments specialist, has urgedboth small- and medium-sized businesses (SMBs) who conduct trade overseas to remain proactive in their approach to mitigating currency risk as the $AUD today hit a record high against the $USD.

Against the backdrop of the $AUD recently hitting a record post-float high of $1.0578 on Monday, Travelex’s General Manager Mid Market – Global Business Payments, Simon Glendenning warned businesses to ensure they remain covered should the dollar run out of momentum.

“The record high $AUD has allowed Australian SMBs to access lower cost imports and raw materials from the United States and other markets. The buoyant dollar has seen many businesses commence importing for the first time and, at the same time, many long term importers have unwound hedges to attempt to take advantage of the high dollar environment, despite the risk involved.

“Whilst many Australian importers have been able to enjoy the benefits of improved margins, the volatility seen in recent years should send a warning to importers that currency markets can move quickly and they need to be prepared accordingly. SMBs need to take a proactive approach to protecting their margins should the currency retreat from these historic highs.

“Although the strong $AUD gives importers an opportunity to lower their cost of goods or procure more imported products, SMBs should be cautious to not dramatically change their purchasing patterns simply because the $AUD is strong. Cheap products that sit on inventory shelves for too long can tie up valuable cash flow and become dangerously expensive products over time,” Mr Glendenning said.

Mr Glendenning also said importers should be wary of suppliers looking to take advantage of the strong dollar by putting up their prices. This can quickly erode any gains an Australian importer has enjoyed from the value of the $AUD.

Mr Glendenning said while there were a range of views about the outlook for the Australian dollar, it remained important for all businesses involved in international trade to focus on implementing strategies that ensured they remained competitive in the long term.  

“Unfortunately, every company that conducts business internationally is likely to be exposed to movements in the value of the $AUD. Businesses need to understand the risk to their bottom line of adverse movements in the dollar and take steps to protect their profit margins regardless of how favourable the trading environment might seem at any given point in time.”

–ENDS–

For further information or interviews, please contact:Lionel Brown, Statecraft T: 0417 745 044
E: lionel.brown@statecraft.com.au