AUD effect on Banks - Aussie Stock Forums

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  1. #1

    Default AUD effect on Banks


    I am interested if anyone knows what effect (if any) the AUD has on bank profits. I know that a rising dollar is bad for exports and good for imports but was thinking banks were complaining about funding costs (sourced globally) during the GFC and using this as an excuse to raise rates. If funding is from global sources wouldnt this mean repayment costs are lowered with a rising AUD?

    The greatest trick the devil ever played was convincing mankind he does not exist.

  2. #2

    Default Re: AUD effect on Banks

    Some banks have overseas operations which would mean that they would have reduced profits when repratriating those funds. Hopefully though, they can keep the money over there and use it for growth and other requirements, and then the only risk is translation risk - meaning the only losses would be for reporting purposes...

  3. #3
    tayser's Avatar
    Join Date
    Jan 2007

    Default Re: AUD effect on Banks

    Rising AUD exchange rates = more demand for AUD, and the big 4 are essentially the proxy gatekeepers of the AUD for the RBA. All 4 are the big dealers = more demand = more volume = more commission = more margin for them when dealing with FX transactions.

    Similarly they practically own AUD/NZD trade: their AU trading banks and NZ subsidiaries are the primary dealers for this pair.

    NAB with its UK and US operations are exposed to GBP/AUD and AUD/USD
    ANZ with its Asian operations are exposed to AUD/USD the most (when they're advocating 20% of their revenue coming from here, they'd probably prefer a rate below parity!)

    When they go offshore for funding of local loan book, they're not looking for USD!

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