Around 15 months ago we made the prediction via Twitter that the Australian Dollar would hit the 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 set up 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.

The post Dollar Hits New High: What it Means for Business appeared first on Reload Consulting.

Job losses were below anticipated figures, GDP growth rates exceeded expectations, and interest rates didn’t reach the “free money” levels of some other economies.

As a result of this, and some economic resilience by China, the Australian dollar is holding at above US 90 cents, and I tend to believe that this will continue to rise and hit the US $1.10 by Christmas.

Many would consider this prediction impossible, given that since the dollar was floated in 1983 we are yet to hit parity with the US, but there are a few more ‘ducks in a row’ this time around.

For one, and possibly the biggest factor was the comment made by RBA Governor Glenn Stevens late last year that the RBA would not be interfering with the currency’s value during this ascent.

Normally, the RBA will trade in foreign exchange reserves to dampen the dollar’s value. This keeps our export prices from becoming too expensive for the rest of the world.

The downside to this is that the practice of dampening the currency causes inflation, which in turn puts upward pressure on interest rates, which is probably one of the reasons why the RBA has chosen not to interfere this time. That, and the fact that we now have significant Government debt adds further weight to the argument for a higher Aussie dollar.

So whilst the higher dollar puts exporters under pressure, it does open the door for local retailers of imported goods to make their mark. Australian sellers of foreign-produced goods are facing potentially one of the most lucrative periods of the last 20 years.

This makes 2010 a great year to be an importer.

The post 2010: The Year For Importers appeared first on Reload Consulting.