Making hay while the dollar rises

Will anything stop our runaway Australian dollar? Overnight it crashed through 94c on its way to a two-year high, meaning that our dollar is now at a similar level to before the GFC.

What’s driving the dollar is the fact that everyone is getting a lot more comfortable about the state of the US economic recovery. When investors feel good, they tend to look at places that are classified as a bit more risky than the US and Europe, and they enter our market looking for good investments. To do that, they need to buy the local currency, so the buck starts rising.

Obviously, the rising dollar is not good for exporters, but a stronger currency does create some opportunities for smart SMEs, particularly those who import goods from overseas in US dollars.

Remember, China mainly does business in US dollars, so you need to think outside just US opportunities.

Here are some ideas:

• Stock up on US-dollar denominated raw materials (but be careful you don’t get trapped with excess stock).
• If you can’t stock up on raw materials, look to lock in longer-term deals at the high dollar rates.
• If you’ve been considering entering the US market by buying up a local player, now looks like a great time. Your investment will go further and the competition is weak.
• Think about updating key plant and equipment.
• Exporting is tough right now, but cheap travel means it’s a good time to jet off for some market research (or a holiday).
• Try to attract staff from overseas – the salary you can offer will be a lot more competitive now than it would have been 12 months ago, and with high unemployment in the US you never know your luck.
• Buy those business books you’ve wanted forever.

If you’ve got any more US dollar opportunities, let us know in the comments below.