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<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Australian dollar rebounding strongly
</TR><!-- headline one : end --><TR>Stronger commodity prices supporting surge, but importers feel pinch </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Gabriel Chen
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
</TD><TD vAlign=bottom>
ST PHOTO: ALPHONSUS CHERN
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->A STUNNING rebound in the Australian dollar has left tourists and foreign students Down Under with markedly less spending power.
Importers of Australian goods are also starting to feel the pinch though exporters selling products there are smiling.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
SHARP RISE
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>The Australian dollar has gained ground strongly on the back of rising global appetite for risk and growing optimism about a recovery in China - a major buyer of Australia's vast reserves of commodities.
Against many major currencies, the Australian dollar has hit eight-month highs. For example, it was trading at $1.186 to the Singapore dollar yesterday, a level not seen since September last year, before falling to $1.17. It sank dramatically to a six-year low of 91.58 Singapore cents in October, but has since rebounded sharply.
The big shift is good news for exporters here whose products become cheaper in Australia, but pain is striking importers paying for goods from the country.
They are having to buy in Australian dollars but to sell them in the local currency. For instance, Drayton, which imports and distributes Australian wines to hotels and bars here, sees some cost pressures due to the stronger Australian currency. It is monitoring the situation.
'I may raise the price of wine if the Singdollar hits $1.30 to one Aussie dollar,' said marketing manager Raymond Toh.
Other companies to feel the effects are those wanting to expand to Australia, where the economic slowdown so far appears mild compared with other developed economies. They are rethinking such plans due to the Australian dollar spike.
'When the Aussie dollar started to go down last year, we revisited the idea of expanding our outlets there,' said Mr Douglas Foo, chief executive of Apex-Pal International, which runs the Sakae Sushi restaurant chain. 'But we didn't jump in because the financial crisis set in, and we said, 'Let's be more prudent'. Now when we're thinking about it, the Aussie currency rebounds,' he said.
Other losers include foreign tourists visiting Australia who are suffering from the higher exchange rate.
Even expatriates working here and with investments denominated in Australian dollars are bound to worry. Australian Jane Fraser, an advertising executive, said she has a mortgage to settle in Australia, but she receives her monthly salary in Singdollars. 'When you send money home, relatively it'll cost much more now,' she said.
Experts say stronger commodity prices and economic indicators from Australia are supporting the currency's surge.
Expectations of a strong recovery in China have helped turn sentiment on commodity markets. Investors are betting that Australia will be a big beneficiary of this surge, since it is a major supplier of resources to China.
'It's a commodity story and we think China has moved to a more import-intensive model, but the Australian economy has also been very resilient,' said Societe Generale's Asia foreign exchange and rates strategist, Mr Patrick Bennett. He expects the Australian dollar to head back to the $1.20 to $1.30 level by year-end.
According to official data released yesterday, Australia's economy expanded 0.4 per cent in the first quarter from the fourth quarter, defying expectations and sidestepping a technical recession.
Investors who believe the worst of the global crisis is over are buying higher-yielding currencies and assets.
One beneficiary is the Australian dollar, whose yield of about 3 per cent dwarfs the 0.1 per cent in Japan and as low as zero in the United States.
The Australian dollar's sharp and rapid rise against the Japanese yen has also led some analysts to suggest that the classic yen carry trade, in which investors borrow money in the low-yielding yen to invest in a higher-yielding currency, could make a comeback if market volatility eases further. 'There's a good chance the yen carry trade might come back but that depends on how long the investor's risk appetite is going to be played out,' said Mr Manpreet Gill, Asia strategist at Barclays Wealth.
[email protected] <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->
</TR><!-- headline one : end --><TR>Stronger commodity prices supporting surge, but importers feel pinch </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Gabriel Chen
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
ST PHOTO: ALPHONSUS CHERN
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->A STUNNING rebound in the Australian dollar has left tourists and foreign students Down Under with markedly less spending power.
Importers of Australian goods are also starting to feel the pinch though exporters selling products there are smiling.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story -->RELATED LINKS
<!-- Audio --><!-- Video --><!-- PDF -->
<!-- Photo Gallery -->
</TD></TR></TBODY></TABLE>The Australian dollar has gained ground strongly on the back of rising global appetite for risk and growing optimism about a recovery in China - a major buyer of Australia's vast reserves of commodities.
Against many major currencies, the Australian dollar has hit eight-month highs. For example, it was trading at $1.186 to the Singapore dollar yesterday, a level not seen since September last year, before falling to $1.17. It sank dramatically to a six-year low of 91.58 Singapore cents in October, but has since rebounded sharply.
The big shift is good news for exporters here whose products become cheaper in Australia, but pain is striking importers paying for goods from the country.
They are having to buy in Australian dollars but to sell them in the local currency. For instance, Drayton, which imports and distributes Australian wines to hotels and bars here, sees some cost pressures due to the stronger Australian currency. It is monitoring the situation.
'I may raise the price of wine if the Singdollar hits $1.30 to one Aussie dollar,' said marketing manager Raymond Toh.
Other companies to feel the effects are those wanting to expand to Australia, where the economic slowdown so far appears mild compared with other developed economies. They are rethinking such plans due to the Australian dollar spike.
'When the Aussie dollar started to go down last year, we revisited the idea of expanding our outlets there,' said Mr Douglas Foo, chief executive of Apex-Pal International, which runs the Sakae Sushi restaurant chain. 'But we didn't jump in because the financial crisis set in, and we said, 'Let's be more prudent'. Now when we're thinking about it, the Aussie currency rebounds,' he said.
Other losers include foreign tourists visiting Australia who are suffering from the higher exchange rate.
Even expatriates working here and with investments denominated in Australian dollars are bound to worry. Australian Jane Fraser, an advertising executive, said she has a mortgage to settle in Australia, but she receives her monthly salary in Singdollars. 'When you send money home, relatively it'll cost much more now,' she said.
Experts say stronger commodity prices and economic indicators from Australia are supporting the currency's surge.
Expectations of a strong recovery in China have helped turn sentiment on commodity markets. Investors are betting that Australia will be a big beneficiary of this surge, since it is a major supplier of resources to China.
'It's a commodity story and we think China has moved to a more import-intensive model, but the Australian economy has also been very resilient,' said Societe Generale's Asia foreign exchange and rates strategist, Mr Patrick Bennett. He expects the Australian dollar to head back to the $1.20 to $1.30 level by year-end.
According to official data released yesterday, Australia's economy expanded 0.4 per cent in the first quarter from the fourth quarter, defying expectations and sidestepping a technical recession.
Investors who believe the worst of the global crisis is over are buying higher-yielding currencies and assets.
One beneficiary is the Australian dollar, whose yield of about 3 per cent dwarfs the 0.1 per cent in Japan and as low as zero in the United States.
The Australian dollar's sharp and rapid rise against the Japanese yen has also led some analysts to suggest that the classic yen carry trade, in which investors borrow money in the low-yielding yen to invest in a higher-yielding currency, could make a comeback if market volatility eases further. 'There's a good chance the yen carry trade might come back but that depends on how long the investor's risk appetite is going to be played out,' said Mr Manpreet Gill, Asia strategist at Barclays Wealth.
[email protected] <!-- end of for each --><!-- Current Ratings : start --><!-- Current Ratings : end --><!-- vbbintegration : start -->
