The findings underscore the degree to which currency volatility, amplified by the Iran war, has become a primary risk management concern for Australian businesses and institutional investors.
The findings underscore the degree to which currency volatility, amplified by the Iran war, has become a primary risk management concern for Australian businesses and institutional investors. The sharp divergence in hedging behaviour between large and small corporates highlights a structural vulnerability, with smaller businesses carrying materially greater exposure to adverse AUD moves.
For super funds, the planned lift in hedge ratios across alternatives such as private equity and private credit signals a broader reassessment of currency risk in portfolios that have historically carried lower coverage in those asset classes. Summary: Importers hedging around 80% of currency exposures; exporters that hedge covering 86% Businesses with both import and export activity hedging around two-thirds of exposures, reflecting natural offsets More than 80% of importers expect profits to fall, averaging a 6.8% decline on a 10% drop in AUD/USD A similar share of exporters expect profits to rise, with an average uplift of 7.9% Nearly all large corporates with turnover above A$725m hedge currency exposure, versus 54% of smaller businesses with turnover of A$5m to A$20m Super funds hedge three-quarters or more of foreign property and infrastructure assets, but below one-third for private equity and hedge funds More than 80% of super funds plan to increase foreign exchange exposure in the next three months, by an average of 13.6% Almost 90% of super funds expect to lift hedge ratios across all asset classes in the next three months AUD year-end forecasts: super funds at US$0.71, corporates slightly more optimistic at US$0.72 Australian corporates are hedging at elevated rates as geopolitical uncertainty stemming from the Iran conflict drives a significant reassessment of currency risk, according to the inaugural CommBank FX Barometer published by Commonwealth Bank of Australia. The quarterly survey, which draws on responses from around 1,000 Australian-based corporates and…