The Australian dollar is flying towards 93 cents, this time on, well, nothing:
No news is now an Aussie spike driver! Must have hits some stops and driven short covering.
Meanwhile, according to Citi, exporters are choking. From the SMH blog:
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Citi and East Partners latest quarterly trade and finance index finds that traders started feeling pain when the local unit breached 92 US cents.
‘‘We’re beyond the tipping point of equilibrium between importer and exporter sentiment,’’ Citi’s trade and treasury solutions head Scott Southall says:
- Most importers and exporters say their ideal level for the dollar is 85 to 90 US cents. But the competitiveness of exporters is hindered when the Aussie rises above 92 US cents.
- An optimal exchange rate from a trade perspective is one where importers and exporters can both find some advantage. Now that the currency has appreciated beyond this level, we’re moving into positive territory for importers and headwinds for exporters.
- At US 85 – 90 cents, both groups believed they had nominal pricing power with exporters forecasting a 0.3 per cent increase in their pricing and importers a 0.5 per cent increase.
All together now: Gooooooooooooooo Gleeeeeeeeeeeenn Greeeeeeeeeeeeeeenspan!
