The exchange rate of a country's currency plays a crucial role in its economic dynamics. A weaker currency can be a double-edged sword, but in the context of the Australian dollar, it can open doors to numerous global opportunities for both Business-to-Business (B2B) enterprises and Non-for-Profit (NFP) organisations.
The AUS dollar is down this year against most currencies. Against the US dollar, the AUS dollar is valued at 64 cents, and is projected to drop to 60 cents soon.
It is also dropping against most European currencies, including the Euro, the Swiss Franc and the Pound Sterling.
Still, the Australian dollar is the 5th most traded currency in the world.
In this blog post, we'll explore how a lower Australian dollar can benefit different sectors, making Australian goods, services, and causes more accessible to the world.
Understanding the Impact of a Lower Australian Dollar
A lower Australian dollar makes Australian goods and services more affordable for international buyers. This leads to increased demand and export growth.
Imagine an overseas buyer interested in Australian wine or manufactured goods; the price is suddenly more appealing. This is a win-win for both Australian producers and foreign buyers.
The wine industry, for instance, has witnessed a surge in exports due to a favourable exchange rate. Australian wineries have seen demand increase from markets like China, the United States, and Europe.
Revenues in the Australian wine production industry will increase by 2.3% in 2023 compared to the previous year.
Sectors like tourism and education, which rely heavily on international clients, have also experienced a boost in interest.
Foreign students and tourists find Australia more budget-friendly, creating an influx of revenue.
Attracting International Clients and Consumers
A weaker Australian dollar serves as a powerful incentive for international clients and customers.
The affordability factor makes Australian products and services more attractive to foreign buyers. This, in turn, can open up new markets and expand customer bases for B2B organisations.
For example, service-based businesses like software companies can attract more foreign clients who seek cost-effective solutions.
Cyber-security is one of the fastest growing industries in Australia, and companies such as Borderless CS and Gridware are experiencing growth and higher domestic and international demand.
Cybersecurity is almost obligatory for all businesses to protect data breaches and operate safely. Why not, then, seek the most cost-effective service out there? The weakened AUS gives foreign companies that option, which in turn, benefits the Australian economy.
The demand for cybersecurity professionals is steadily growing, and by 2026, it is estimated 18,000 additional jobs will be created in the field.
Enhanced Marketability for NFP Organisations
Non-for-Profit organisations (NFPs) can also benefit significantly from a weaker Australian dollar. These organisations often rely on fundraising and donations, and a lower currency value can help them achieve more with less.
With the rise of social media and online communication, it's easier than ever for NFPs to connect with international donors. Some organisations have successfully expanded their reach and fundraising efforts through international partnerships.
The recently created Emergency Action Alliance saw the potential to appeal to international actors. A conglomerate of 15 Australian NFPs, the EAA is focused on increasing humanitarian reach but also boosting fundraising efforts beyond the national sphere.
It has partnered with international corporate actors, as well as 10 other nations with similar joint fundraising mechanisms to expand its scope and influence across the globe. Its first ever project raised over 3.5 million for the Ukrainian crisis.
The EAA demonstrates the tangibility of cross-border collaborations and global charitable initiatives. NFPs have the potential to pool resources and expertise from different countries, creating a larger, more effective global impact.
Leveraging Digital Marketing and E-Commerce
One of the key strategies for B2B and NFP organisations to capitalise on a weaker Australian dollar is to invest in digital marketing and e-commerce. A strong online presence is vital for global marketability.
Through digital marketing and e-commerce platforms, businesses can target international audiences more effectively. They can tailor their marketing strategies to different regions, languages, and cultures, making their products and services more appealing to a global audience.
One such company taking the reins is Fleet Space Technologies. The start-up company constructs nanosatellites to increase effective communication networks. Its approach to digital marketing is holistic, as it utilises social media including IG, X and Youtube to market itself internationally.
(Source: Fleet Space)
Fleet produces educational content, conducts webinars and publishes conference talks, all in an effort to appeal to a larger, global audience and secure its continued growth.
Risks and Mitigation Strategies
As much as a weaker AUS is advantageous both for international actors and domestic organisations, it is important to acknowledge certain risks associated with the matter including inflation.
A weaker currency can make exports more competitive, thereby also increasing the cost of imported goods and materials. This can lead to higher production costs, which might get passed on to the consumer.
To mitigate these risks, B2B and NFP organisations need to carefully plan and manage their finances. Hedging strategies, such as forward contracts, can help stabilise cash flows, especially for organisations engaged in international trade.
These strategies allow them to lock in exchange rates to protect against unfavourable currency movements.
Conclusion
A weaker Australian dollar opens a realm of global opportunities for B2B and NFP organisations. It makes Australian goods, services, and causes more attractive on the international stage, leading to increased demand, client expansion, and fundraising opportunities.
Leveraging digital marketing can further enhance marketability, allowing businesses and organisations to reach a broader audience. Risks, however, do abound and it remains crucial to approach these opportunities with caution and careful financial planning.
Organisations should explore opportunities presented by a weaker AUS and consider international expansion as a means of growth.
If done right, B2Bs and NFPs can thrive in the global market but also contribute to the economic and social well-being of Australia and the world.
Not everything is in our control, but the time is now to be strategic and make the world your stage!