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$A to fall but remain above parity

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AAP

2012-12-14

The local currency is expected to weaken, but remain above parity with the US dollar next year, according to a survey of Australian businesses.

The Commonwealth Bank latest Aussie dollar barometer - which measures companies' expectations of the currency - shows that both importers and exporters expect the currency to start 2013 strongly, before slowly depreciating.

Importers are the most positive, expecting the Australia dollar to peak at 105 US cents in March, while exporters believe it will peak at 104 US cents the same month.

It is then expected to fall steadily, but remain above parity - at 100 US cents - at the end of 2013.

The majority of importers (82 per cent) said they would hedge their exposure to the currency next year, compared to 58 per cent of exporters.

The most optimistic predictions come from companies with a turnover of $500 million or more, who expect the currency to reach 106 US cents by March, and remain above 103 cents for the rest of the year.

Opinions also vary by sector, with those in the finance sector expecting the dollar to average 108.50 US cents over the next four quarters, while the consumer discretionary sector is lest optimistic, with an average of 103.10 cents.

The December edition of the barometer includes a 10-year forecast for the currency, showing that exporters predictably favour a lower currency compared to importers.

In the next 10 years, exporters expect the Australian dollar to average 81 US cents, while importers predict an average of 91 cents.

The Commonwealth Bank expects the currency to average 93 US cents over the next decade.

Caroline Smith