Here's another side to the coin

You could be forgiven for thinking we were in a currency crisis over the past few months, with headlines such as "Australian dollar crashes" commonplace. But behind the hype there is a deeper tale to be told.

You could be forgiven for thinking we were in a currency crisis over the past few months, with headlines such as "Australian dollar crashes" commonplace. But behind the hype there is a deeper tale to be told.

Consumers have reaped the benefits of a higher dollar, splurging on overseas trips like in no other time in our history and increasingly moving online for everything from clothing to video games and jewellery.

Domestic companies have struggled to adapt to a global environment in which shoppers can take advantage of lower costs and wages in other countries.

"It is always perplexing to see how much of the mainstream media report declines in the value of the Australian dollar as a negative development and something that poses a threat to Australia's wealth and prosperity," said Richard Gibbs, global head of economics at Macquarie.

The Reserve Bank also believes a lower dollar will be good for Australian companies.

In its Statement on Monetary Policy, released on Friday, the RBA estimated that a 10 per cent depreciation of the exchange rate could stimulate growth by 0.5 per cent to 1 per cent of GDP over two years or so.

"Further depreciation of a similar magnitude to that already experienced to date could, for example, deliver above-trend growth sooner than currently forecast," the central bank said. The local currency has fallen 14 per cent since its 2013 peak of US105.98¢ in January. It is one of the worst-performing currencies this year.

The dive was sparked in May when the US Federal Reserve chairman, Ben Bernanke, gave his first hint that the Fed was keen to wind up its $US85 billion-a-month ($94 billion) bond-buying program, which has been pumping money into the US economy.

Mr Bernanke's policy has essentially been devaluing the greenback against most major currencies and saw the Aussie reach a record high of US110.2¢ in July 2011.

Most economists predict a new average somewhere between US80¢-US85¢, and there are local stocks that stand to benefit. Companies with exposure to America and earn their income in US dollars are the most obvious candidates. "However, all other things are not equal," said Credit Suisse analyst Damien Boey.

"Typically, you'll find because the Aussie is a high-yield commodity currency it tends to ebb and flow with the state of world growth." He expects the local market to be weaker as the dollar falls.

Taking a look at a handful of stocks heavily influenced by the greenback, the returns for 2013 are quite staggering.

The healthcare companies CSL and ResMed have surged 22.5 per cent and 40.2 per cent respectively.

A big point recently has been online shopping and whether people might start returning to domestic retailers, rather than buy their goods from overseas on the internet.

But the fall in the dollar is a double-edged sword for retailers that have been crying poor with the Aussie above parity. They will face the challenge of the rising costs of imports. The lower dollar might lead to fewer Australians going overseas as the appeal of the high currency disappears.

While there are obviously other contributing factors to their falls. Qantas and Virgin stocks have performed poorly in 2013. Qantas has dropped 19.1 per cent and Virgin has lost 1.9 per cent.

On the flip side, the travel companies Flight Centre and Webjet have proved stronger. Flight Centre has jumped a massive 57.4 per cent in 2013, while Webjet has inched up 2.5 per cent.

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