Businesses feel dollar fallout
THE soaring Aussie dollar indicates a strong economy, but as it draws closer to parity with the greenback local businesses are feeling the fallout.
A handful of major exporters on the Coffs Coast have indicated if the dollar continues its record rise some aspects of their business overseas will be affected.
Coffs Harbour’s W E Smith Engineering, manufacturing heat exchangers, reactors and autoclaves, believes it has lost two or three contracts during the past three months due to the exchange rate fluctuations.
The company’s financial controller, Boonsiong Tam, said companies had walked away from contracts because the currency was so high.
“We’re hoping the exchange rate becomes more stable, so we can win more jobs and sign contracts,” Mr Tam said. “As long as it is fluctuating it is not that great. A stable exchange rate is better for us.”
Another major engineering firm with world recognition, Greenspan Technology, has been more fortunate.
“Our parent company allows us to fix rates on the day of signing, which protects us from losses, but if it falls, we don’t get the benefit either,” director Mark Wolf said.
“Basically, what we do is write our contracts and fix the exchange rate either at the day of signing or we will agree to an exchange rate and benchmark to that.”
The water technology company also routes all international contracts through its Singaporean office to to deal with currency fluctuations.
“Overall, the effect is they have to transfer money between the US dollar and Aussie dollar accounts to offset fluctuations,” he said.
“We would much prefer a lower US dollar to Aussie dollar. The Singapore currency tends to be more stable against the US currency. Exchange rate fluctuations cost us a lot of money.
“Let’s say, I write a contract today at parity with the US dollar and the contract is to be paid in Malaysian ringgit and you get A$1.20 to the ringgit. We’re being paid in Malaysian ringgit and we’re going to be paying out more in Australian dollars. Our parent company says you cannot predict currency movements, so we will protect you.