Well, we were right…kind of.
Around 15 months ago we made the prediction via Twitter that the Australian Dollar would hit US $1.10 by Christmas.
At the time the Aussie dollar was buying around 90 US cents and opinion was split over how high it would go. Sadly, it didn’t quite reach the $1.10 mark by Christmas last year, but we weren’t far off.
But the big question now, is what does this mean for local businesses?
As a general rule of thumb, a high Aussie dollar is great for importers of overseas products as the cost of those goods is comparatively cheaper. It also usually means consumers win out as well, as online shopping from International stores is much cheaper, even after the extra shipping costs.
Exporters, as well as those in tourism, generally lose out as a result of a high value local currency. Exporters find their products are now much more expensive for overseas buyers to purchase and those in the tourism sector find that travellers will prefer to head to places where they get better value for money.
But despite all this, the high dollar presents a great opportunity for local businesses in a number of ways.
Setting up an International Presence
With the Aussie dollar high, the cost to setup International offices or a presence in other countries is historically low. Not only do you get more US dollars/pounds/Euro for your buck, but thanks to the GFC leasing costs in overseas markets are also down considerably.
Higher unemployment means that recruiting good staff is easier purely because there’s more to choose from and depending upon your industry, the Federal Government has grants available for those looking to sell overseas.
What’s even better is when the dollar heads back to its natural levels (around 75-80 US cents), those that have invested now will be well placed to multiply overseas profits when they bring them back to our shores.
Utilising Overseas Labour or Products
Whilst this might seem un-Australian to be promoting using overseas labour or products, the realities of business mean that in some cases, getting cost-effective products or services in Australia just isn’t possible.
We have one of the lowest unemployment rates in the world at the moment, meaning there’s less labour available, and our high dollar makes using overseas labour (particularly for administrative or back-of-house processing) highly attractive.
Likewise, now is the time to shop around for cheaper products or manufacturing if it’s practical to do so.
So whilst the high Aussie dollar has its benefits and shortcomings, the best businesses are looking for ways to use that to their advantage.