Consumer electronic goods along with computer gear could get very expensive in Australia after the Australian dollar plunged to $0.60 against the US dollar over the weekend in the biggest sell-off since it was floated in 1983.
Distributors and vendors say that will be forced to increase the price of goods as much as 30%. One Sydney based distributor of Hi Fi and consumer technology gear said “It looks grim, we lifted our prices 15% last week and we will have to look at another 15% if the dollar keeps going down. He added, “I have been around long enough to remember when the dollar was $0.47 we could well be heading back there”.
London’s Financial Times described the currency the “whipping boy” of foreign exchange markets.
The dollar closed in US trade at US61.78 cents, down US4.5 cents on Friday night and 37 per cent from the high of US98.49 cents it reached three months ago.
The Sydney Morning Herald reports “It’s just strange. It’s just weird,” said the chief economist of BT Financial Group, Chris Caton. Dr Caton said about one-third of the fall in the dollar could be explained by the recent surge in the US dollar, which has risen against major currencies such as the euro and the British pound.
“There’s no rational reason for us to be at 62 cents,” he said. The chief equities economist with CommSec, Craig James, said the recent fall in the dollar could be a blessing for the slowing domestic economy because it would provide a boost to exports.
David de Garis, an economist with NAB told the Fairfax newspaper, it was possible retailers and importers could decide to forsake profit margins and keep a lid on prices. “It depends on consumer demand.”
JB Hi-Fi chief executive Richard Uechtritz said the downturn was yet to hit business at the home electronics and music retailer.
“At the moment, fingers crossed, we are trading to expectations,” Mr Uechtritz told The Australian yesterday. He said the company’s sales remained strong and it would fulfil its plans to open 24 stores this year. He said JB was perhaps benefiting from consumers shifting their spending from holidays to home entertainment.
Uechtritz also believes that there will be a further interest rate cut on Melbourne Cup day.
The Australian newspaper also reports that Victorian director of the AI Group, Tim Piper, said member companies were reporting sales of furniture and larger items were dropping off. He said firms across all industry sectors – except those supplying either the mining industry or China – had been feeling the pinch for the past three months.
“Our members are telling us the slowdown is quite considerable at the moment,” he said. “Some companies are reporting a 30 per cent reduction in orders.”
