The fascinating realm of Foreign Exchange (FX) in Australia

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Let’s dive into the intriguing world of Australia’s trade balance and the fascinating Foreign Exchange (FX) realm.

Australia’s Trade Balance: In December 2023, Australia’s trade balance data revealed that imports of goods surged by 4.8% month-over-month, reaching AUD $36.17 billion. Exports totalled AUD $47.13 billion. But how is this massive import bill getting paid for? The answer lies in FX transactions.

Corporate Perspective: While not all of this activity is solely from corporate Australia, a substantial portion does come from businesses. Here’s where it gets interesting: A 2019 ECB Report surveyed over 10,000 companies and found that, on average, corporates paid 25 times more to hedge their FX than “more sophisticated” clients.

Global Precedents: In 2021, Wells Fargo settled with the SEC for overcharging small and mid-size businesses for foreign exchange transactions in Europe and the US. But what about Australia? Surely, such practices wouldn’t occur here, right?

Navigating the FX Landscape: Enter ERA! We have launched FX as one of the 40+ categories that add value through insights. ERA sheds light on FX spread costs for spot and forwards. We provide an analysis and monitoring service, ensuring you know your FX costs compared to what is available on live markets. We can also help optimise your interest receipts across all your currency exposures.

In summary, understanding FX dynamics and managing spread costs can make a significant difference in navigating the complex landscape of international trade. We provide an analysis and monitoring service, giving you an independent benchmark for foreign banking costs. If FX is part of your business, consider making an appointment with your ERA consultant.

Call Ashley (+61 400 844 840) today to help you understand how we can help you achieve your Foreign Exchange (FX) goals!

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