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The greenback – abandon ship!

Posted by Michael Bloch in ecommerce (Wednesday May 7, 2008 )

Sometimes I wonder how these high fallutin’ financial types get the jobs they do.

If you’re in online business catering to a US market, but based outside the USA, it’s likely you’ve been feeling the pinch of the floundering greenback.

Back when I started out in online business seriously just after the turn of the century (sounds ancient doesn’t it), the exchange rate was around 56c US to an Aussie dollar. Ah, the sweet memories. It wasn’t that long ago.

Today it topped 95c.

Here’s how the slide looks over just the last 5 years:

US Australian dollar exchange

Financial boffins at WestPac are now tipping it will reach $US1.01 by March 2009. Ouch!

That hurts, but something that really burned my buns was this idiotic comment from one of said boffins, Westpac’s chief economist Bill Evans.

“Let’s think about it: over the last five years the currency, the Aussie dollar, has risen on average 12 per cent per year, so the additional 6 or 7 per cent I see happening this year certainly won’t be creating the problems that we’ve seen for those sorts of exporters over the last few years”

What drugs is this guy taking? All businesses try to build up buffers in case tough times hit, but those buffers are only going to last so long; there’s only so much you can absorb. In addition to the crappy exchange rate, our interest rates are far higher than over there, we pay more for gas and we’ve seen some of the highest food price increases in the entire OECD.

While I’m not going to have to don the suit and tie again (touch wood) or even a burger flipper as a result of this predicted parity coming true, it’s certainly no comfort to be working harder for less; and I hate to think how many Aussie online businesses that cater to that market have been struggling as the US empire slowly crumbles.

Anyhow, one thing’s certain, time to start diversifying and spreading the risk a bit more methinks. Perhaps brush up on Mandarin? Personally, I will welcome our new Chinese masters ;). In fact, I’m totally dressed in Chinese made clothing now.


1 comment for The greenback – abandon ship!
  1. Evans scares me.

    Comment by Ern — May 9, 2008 @ 10:35 pm

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