currency retrospective

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    OVERVIEW:
    Irrespective of what particular posters may feel about particular currencies, fiat and all, the facts remain that during 2003, the AUD has increased at an alarming rate across all currency sectors (and not just against the USD).


    INTERNATIONAL COMPETITIVENESS, AT RISK:
    As a result of this, our international competitiveness is now under challenge (maybe, not yet threat), but under challenge, nonetheless.

    Ordinarily, it would have been OK for our currency to rise against the Greenback, provided that our terms of trade (ie: reflected in the TWI) did not similarly deteriorate, nor our competitive position against our top 5 trading partners (as reflected in in the TWI index rates).


    APPRECIATION AGAINST USD:
    At the beginning of the year, the AUD was trading at USD 56.62. That was on 31/12/02.

    At yesterday's local 4.00pm close (7/10/03), this same fix was 68.60 (although, in this morning's local trading, the AUD has touched out at 68.94, after reaching an overnight high of near 69.20). Since 31/12/02, the AUD has appreciated 22% against the Greenback.


    APPRECIATION AGAINST TWI:
    At first glance, this seems OK except for the fact that during the same time period, the TWI (Trade Weighted Index) has also moved adversely against the AUD.

    This has resulted in a sharply lower level of international competitiveness and a somewhat shaky future outlook (for exports and international trade from an Australian business perspective).

    On 31/12/02, the TWI was valued at 51.7, but closed locally last night at 59.5, for a YTD appreciation in value of 16%.


    CURRENT TWI WEIGHTINGS:
    The current weightings in the TWI are, as follows (last changed, October 2002):
    Japanese yen = 17.2058% TWI weighting
    United States dollar = 15.0681%
    European euro = 12.3981%
    Chinese renminbi = 8.5754%
    South Korean won = 6.5588%
    New Zealand dollar = 5.5689%
    UK pound sterling = 5.1365%
    Singapore dollar = 4.0090%
    New Taiwan dollar = 3.5887%
    Indonesian rupiah = 3.2399%
    Malaysian ringgit = 2.8733%
    Hong Kong dollar = 2.4360%
    Thai baht = 2.3356%
    Saudi Arabian riyal = 1.6315%
    Canadian dollar = 1.5743%
    Indian rupee = 1.5280%
    Vietnamese dong = 1.0583%
    South African rand = 0.9971%
    PNG kina = 0.9588%
    United Arab Emirates dirham = 0.8940%
    Philippine peso = 0.8454%
    Swedish krona = 0.8310%
    Swiss franc = 0.6875%


    CURRENCY IMPACT INVOLVING TOP 5 TRADING PARTNERS:
    Against our top 5 trading partners (refer TWI rankings), the AUD has appreciated in value by
    JPY = Index weight of 17.2%, appreciated by +14%;
    USD = Index of 15.1%, appreciated by 22%;
    EUR = Index of 12.4%, appreciated by 9%;
    CNY = Index of 8.6%, appreciated by 22%;
    KRW = Index of 6.6%, appreciated by 18%.

    The average rate of appreciation in the value of the AUD against our top 5 trading partners (ranked according to the TWI) has been 16.6% through to 4.00pm local time, yesterday (7/10/03).

    Going into 2004, that is going to start to hurt our export sector, our commodities, our farming sector, and most of all, our terms of trade and current account deficit.


    AUD HAS APPRECIATED AGAINST MOST CURRENCIES:

    Since 31/12/02, the AUD has APPRECIATED IN VALUE AGAINST ALL OF THE FOLLOWING CURRENCIES (ie: reflecting deteriorating terms of trade balanced against Australia's competitive interests):

    US Dollar USD = +22%
    Chinese Renminbi CNY = +22%
    Malaysian Ringgit MYR = +22%
    Singapore Dollar SGD = +21%
    Hong Kong Dollar HKD = +20%

    New Taiwan Dollar TWD = +18%
    South Korean Won KRW = +18%

    Trade Weigthed Index TWI = +16%
    UK Pound Sterling GBP = +16%
    Swiss Franc CHF = +16%
    Special Drawing Rights SDR = +16%

    Japanese Yen JPY = +14%
    Indonesian Rupiah IPR = +14%

    Euro EUR = +9%

    NZ Dollar NZD = +7%
    Swedish Krona SEK = 6%
    Canadian Dollar CAD = +4%
 
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