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5422.0 - Feature article: Export and Import currencies, Mar 2003  
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INTRODUCTION

Recent rises in the value of the Australian dollar in relation to some of the currencies of our major trading partners has renewed interest in the currencies used in invoices for Australia's exports and imports.

This article analyses the major invoice currencies used for Australia's international merchandise trade for the five quarters from March quarter 2002 to March quarter 2003. Changes in the composition of the currencies in which goods are invoiced are identified. The article also examines selected invoice currencies of major commodities exported and imported into Australia, classified according to the Standard International Trade Classification Revision 3 (SITC Rev3).

An historical comparison is also provided to examine changes over a longer period. Previous articles in the March quarter 1998 and March quarter 2001 issues of this publication provided similar analyses. Copies of these articles are available on the ABS web site <www.abs.gov.au> by selecting Themes / International Trade / Topics of Interest.

All values in this article are reported in Australian dollars. Details about the treatment of invoice currencies are included as an Appendix to this article.


EXCHANGE RATES

Graph F1 shows movements in the value of the Australian dollar against selected other currencies since the beginning of 2002, which is the period covered by this analysis. The Trade Weighted Index (TWI) is also included. The Australian dollar has appreciated against the US dollar (up 16%) and the Japanese yen (up 4%), but has depreciated against the euro (down 4%) and the NZ dollar (down 11%) in that period, leading to an overall rise in the TWI of 7%.

With an appreciating currency, Australian exports invoiced in Australian dollars become less attractive to foreign buyers, as it takes more of their currency to purchase Australian goods. Australian exports invoiced in other currencies provide smaller Australian dollar returns to exporters, and decrease the nominal value of Australian exports. Australian imports of foreign goods invoiced in other currencies require fewer Australian dollars, making imports more attractive to domestic consumers.

F1 MOVEMENTS IN SELECTED EXCHANGE RATES

GRAPH: Movements in Selected Exchange Rates


EXPORTS

Table F2 lists the major invoice currencies used for Australia's merchandise exports for the period from March quarter 2002 to March quarter 2003. Just over 95% of Australia's exports were written in either US or Australian dollars in that period. The US dollar was
the predominant currency, accounting for 68% of exports while the Australian dollar accounted for 27% of exports. The euro, the NZ dollar and the Japanese yen were the only other currencies in which more than 1% of exports were invoiced since the beginning of 2002.

Over the five quarters, the proportion of exports invoiced in US dollars fell, then rose giving a net increase over the period of 1.3 percentage points to 70.2%. The higher proportion of exports invoiced in US dollars in March quarter 2003 was largely caused by increases in exports of a small number of commodities invoiced mainly in US dollars combined with a fall in exports invoiced in Australian dollars across a range of commodities.

The proportion invoiced in Australian dollars fell a net 1.1 percentage points over the period to 25.8%. The proportion invoiced in Australian dollars in March quarter 2003 was the lowest observed since analysis of invoice currencies commenced in 1997.

F2. INVOICE CURRENCIES FOR EXPORTS
Currency
Mar qtr 2002
Jun qtr 2002
Sep qtr 2002
Dec qtr 2002
Mar qtr 2003
Total
CURRENCY ($million)
US dollars
19,772
20,251
20,276
20,812
19,499
100,609
Australian dollars
7,727
8,031
8,536
8,629
7,158
40,082
Euros
472
471
356
375
335
2,009
NZ dollars
260
309
361
397
345
1,672
Japanese yen
225
252
459
255
209
1,400
Pound sterling
214
247
271
263
195
1,190
Other
43
48
56
44
40
231
Total
28,713
29,609
30,316
30,774
27,782
147,194
PROPORTION (%)
US dollars
68.9
68.4
66.9
67.6
70.2
68.4
Australian dollars
26.9
27.1
28.2
28.0
25.8
27.2
Euros
1.6
1.6
1.2
1.2
1.2
1.4
NZ dollars
0.9
1.0
1.2
1.3
1.2
1.1
Japanese yen
0.8
0.9
1.5
0.8
0.8
1.0
Pound sterling
0.7
0.8
0.9
0.9
0.7
0.8
Other
0.2
0.2
0.2
0.1
0.1
0.2
Total
100.0
100.0
100.0
100.0
100.0
100.0


EXPORT COMMODITIES

Table F3 summarises the invoice currencies used for Australia's major export commodities between March quarter 2002 and March quarter 2003. By commodity, there were substantial differences in the invoice currencies used. The US dollar was used most often as the invoice currency in the resources sector, particularly for gold (SITC 97), natural gas (SITC 34) and coal (SITC 32). Over 95% of each of these
commodities were invoiced in US dollars.

There were several commodities where the Australian dollar was the predominant invoice currency. Over 60% of exports of beverages (SITC 11), miscellaneous manufactured articles (SITC 8) and medicinal and pharmaceutical products (SITC 54) were invoiced in Australian dollars.

For a small number of commodities, other currencies were used for a significant proportion of exports. Around 20% of exports of fish and crustaceans (SITC 03) were invoiced in Japanese yen, while a similar proportion of beverages (SITC 11) were invoiced in pounds sterling, reflecting significant export destinations for these commodities.

F3. INVOICE CURRENCIES OF SELECTED EXPORT COMMODITIES, March qtr 2002 to March qtr 2003
Value
US
Dollars
Australian Dollars
Euros
NZ
Dollars
Japanese Yen
Pounds Sterling
All other currencies
SITC (Rev 3) code and commodity
$m
%
%
%
%
%
%
%
01 Meat and meat preparations
7,200
61.8
31.1
0.7
0.7
2.8
1.5
1.4
02 Dairy products and birds' eggs
3,448
69.5
29.2
0.4
0.2
0.5
0.3
0.0
03 Fish (not marine mammals), crustaceans, molluscs and aquatic invertebrates, and preparations thereof
1,943
35.5
44.2
0.1
0.0
20.1
0.0
0.1
04 Cereals and cereal preparations
6,912
79.4
9.1
10.6
0.1
0.7
0.0
0.1
11 Beverages
3,081
13.8
61.7
2.1
2.0
0.4
18.7
1.2
26 Textile fibres and their wastes (not manufactured into yarn or fabric)
5,954
60.1
34.5
4.9
0.0
0.2
0.3
0.0
28 Metalliferous ores and metal scrap
17,272
90.0
10.0
0.0
0.0
0.0
0.0
0.0
32 Coal, coke and briquettes
15,911
95.5
4.5
0.0
0.0
0.0
0.0
0.0
33 Petroleum, petroleum products and related materials
10,621
82.7
17.3
0.0
0.0
0.0
0.0
0.0
34 Gas, natural and manufactured
4,094
99.9
0.1
0.0
0.0
0.0
0.0
0.0
54 Medicinal and pharmaceutical products
2,385
21.9
68.5
1.7
5.2
0.9
1.4
0.4
68 Non-ferrous metals
10,481
87.7
12.0
0.0
0.1
0.0
0.1
0.0
77 Electrical machinery, apparatus, appliances, parts (incl. non-electrical counterparts of electrical domestic equipment)
2,088
33.2
49.8
11.6
2.1
0.2
3.0
0.2
78 Road vehicles (incl. air-cushion vehicles)
5,210
57.4
29.8
0.4
9.3
2.6
0.6
0.0
8 Miscellaneous manufactured articles
5,418
29.2
60.3
3.4
3.9
0.4
2.6
0.1
93 Special transactions and commodities not classified according to kind
3,484
69.5
28.4
0.1
1.9
0.0
0.1
0.0
97 Gold, non-monetary (excl. gold ores and concentrates)
6,864
97.8
2.2
0.0
0.0
0.0
0.0
0.0
Other
34,828
45.5
49.4
1.0
1.7
1.5
0.6
0.2
Total
147,194
68.4
27.2
1.4
1.1
1.0
0.8
0.2


IMPORTS

Table F4 lists the major invoice currencies used for Australia's merchandise imports for the period from March quarter 2002 to March quarter 2003. The US dollar was the predominant currency, although less so than for exports, accounting for almost 50% of
imports.

The Australian dollar was the second most significant invoice currency over the period, accounting for almost 31% of imports. Other currencies were more significant for imports than exports. The euro (9%) and Japanese yen (4%) were the next most significant invoice currencies, while all other currencies combined accounted for about 7% of imports over the period.

F4. INVOICE CURRENCIES FOR IMPORTS
Currency
Mar qtr 2002
Jun qtr 2002
Sep qtr 2002
Dec qtr 2002
Mar qtr 2003
Total
CURRENCY ($million)
US dollars
14,490
14,650
16,530
18,254
15,583
79,507
Australian dollars
8,599
9,671
10,323
10,446
9,793
48,831
Euros
2,302
2,517
3,130
3,188
2,999
14,136
Japanese yen
1,132
1,202
1,415
1,405
1,266
6,421
Pounds sterling
633
598
754
751
593
3,328
NZ dollars
343
375
431
454
395
1,997
Selected Asian currencies(a)
195
207
208
283
519
1,412
Other
879
693
722
873
725
3,891
Total
28,573
29,913
33,512
35,654
31,873
159,524
PROPORTION (%)
US dollars
50.7
49.0
49.3
51.2
48.9
49.8
Australian dollars
30.1
32.3
30.8
29.3
30.7
30.6
Euros
8.1
8.4
9.3
8.9
9.4
8.9
Japanese yen
4.0
4.0
4.2
3.9
4.0
4.0
Pounds sterling
2.2
2.0
2.2
2.1
1.9
2.1
NZ dollars
1.2
1.3
1.3
1.3
1.2
1.3
Selected Asian currencies(a)
0.7
0.7
0.6
0.8
1.6
0.9
Other
3.1
2.3
2.2
2.4
2.3
2.4
Total
100.0
100.0
100.0
100.0
100.0
100.0
(a) Selected Asian currencies include currencies for the following countries: China, Hong Kong (SAR of China), Indonesia, Republic of Korea, Malaysia, Philippines, Singapore, Taiwan and Thailand.


IMPORT COMMODITIES

Invoice currencies used for Australia's major import commodities are summarised in Table F5 for the period from March quarter 2002 to March quarter 2003.

A small number of commodities were dominated by invoices in US dollars, particularly petroleum products (SITC 33) at 99%, and transport vehicles (excluding road vehicles) (SITC 79) at 82%. By comparison, 75% of medicinal and pharmaceutical products (SITC 54) and almost two-thirds of road vehicles (SITC 78) were invoiced in Australian dollars.

The euro was the third most significant invoice currency, with industrial machinery (SITC 72 & SITC 74) accounting for approximately one-quarter of these imports. The Japanese yen was the invoice currency for 10% of machinery specialised for particular industries (SITC 72), and 13% of road vehicles (SITC 78).

F5. INVOICE CURRENCIES OF SELECTED IMPORT COMMODITIES, March qtr 2002 to March qtr 2003
Value
US Dollars
Australian Dollars
Euros
Japanese Yen
Pounds Sterling
NZ Dollars
All other currencies
SITC (Rev 3) code and commodity
$m
%
%
%
%
%
%
%
33 Petroleum, petroleum products and related materials
12,081
99.3
0.5
0.1
0.0
0.0
0.0
0.0
51 Organic chemicals
3,062
52.2
39.5
4.9
0.9
1.3
0.1
2.0
54 Medicinal and pharmaceutical products
6,547
14.6
75.3
6.4
0.2
1.6
0.4
1.4
69 Manufactures of metals, nes
3,758
51.8
22.1
13.3
2.7
3.3
2.2
4.6
71 Power generating machinery and equipment
3,839
46.2
27.1
10.8
6.0
4.1
0.4
5.4
72 Machinery specialised for particular industries
5,489
36.0
17.9
26.8
10.0
3.2
1.1
4.9
74 General industrial machinery and equipment, nes and machine parts, nes
8,353
40.2
22.8
22.0
6.9
3.0
1.4
3.8
75 Office machines and automatic data processing machines
9,702
75.1
19.3
1.4
2.1
0.6
0.4
1.0
76 Telecommunications and sound recording and reproducing apparatus and equipment
8,244
39.7
46.8
4.8
5.1
2.0
0.2
1.5
77 Electrical machinery, apparatus, appliances, parts (incl. non-electrical counterparts of electrical domestic equipment)
8,469
52.3
23.7
14.3
3.0
3.0
1.1
2.5
78 Road vehicles (incl air-cushion vehicles)
19,676
12.9
64.5
8.3
12.9
0.6
0.3
0.5
79 Transport equipment (excl. road vehicles)
7,345
82.4
12.6
1.5
0.2
1.9
0.5
0.9
84 Articles of apparel and clothing accessories
4,281
58.7
24.2
3.7
0.2
0.7
2.6
10.0
87 Professional, scientific and controlling instruments and apparatus, nes
3,833
48.4
20.1
13.7
3.8
5.2
0.9
7.9
89 Miscellaneous manufactured articles, nes
8,733
49.4
26.6
7.7
1.7
6.1
2.0
6.5
Other
46,112
51.2
26.9
9.8
2.6
2.1
2.4
4.9
Total
159,524
49.8
30.6
8.9
4.0
2.1
1.3
3.3


HISTORICAL COMPARISON

Table F6 shows the proportion of exports and imports invoiced in the major currencies for the last four years. Over this longer period, trends in the data are more readily apparent. The proportion of merchandise exports invoiced in US dollars increased from 64% in 1999 to around 68% in each of the subsequent three years.

The proportion of imports invoiced in US dollars has remained relatively stable over the four year period, while a greater proportion of imports have been invoiced in Australian dollars since 2001 compared with earlier years.

The euro was introduced as a scriptural currency on 1 January 1999. Euro banknotes and coin came into circulation on 1 January 2002, replacing the individual currencies of 12 European Union (EU) countries. Denmark, Sweden and the UK were the only EU countries which subsequently retained their own currencies. This is reflected in the proportion of trade invoiced in the euro which has risen substantially since 2002, particularly for imports.

F6. EXPORTS AND IMPORTS BY INVOICE CURRENCIES
1999
2000
2001
2002
Mar qtr 2003
Currency
%
%
%
%
%
EXPORTS
US dollars
64.2
68.4
68.8
67.9
70.2
Australian dollars
32.1
28.6
27.7
27.6
25.8
Euros
0.2
0.3
0.5
1.4
1.2
NZ dollars
0.8
0.7
0.8
1.1
1.2
Japanese yen
1.0
0.8
0.9
1.0
0.8
Pounds sterling
1.0
0.9
0.9
0.8
0.7
Other
0.7
0.4
0.4
0.2
0.1
Total
100.0
100.0
100.0
100.0
100.0
Total exports ($m)
86,893
110,354
122,530
119,412
27,782
IMPORTS
US dollars
49.7
51.4
49.5
50.1
48.9
Australian dollars
28.6
28.3
30.7
30.6
30.7
Euros
1.2
2.3
4.8
8.7
9.4
Japanese yen
5.6
5.2
4.4
4.0
4.0
Pounds sterling
2.7
3.1
2.4
2.1
1.9
NZ dollars
1.5
1.3
1.3
1.3
1.2
Other
10.7
8.5
7.0
3.2
3.9
Total
100.0
100.0
100.0
100.0
100.0
Total imports ($m)
101,517
116,955
117,746
127,652
31,873


APPENDIX

TREATMENT OF INVOICE CURRENCIES

Historical Comparison

Information on the invoice currencies used in export and import transactions is collected by the Australian Customs Service (Customs) and passed to the ABS with other international trade information.

For exports, goods invoiced in US dollars, Japanese yen, Pounds sterling, Euros and NZ dollars are reported in those foreign currencies. Amounts invoiced in other currencies are converted to Australian dollars by the exporter and this value is reported on the Customs entry. The invoice currency is also reported. The ABS receives the exports data as reported to Customs and converts values reported in the foreign currencies to Australian dollars using the exchange rate prevailing on the date of departure of the goods from Australia.

For imports, the value of the goods is reported to Customs in the invoice currency of the transaction. The Customs system automatically converts the value to Australian dollars using exchange rates prevailing on the reported date of departure of the goods from the overseas country. The ABS receives details of the reported invoice currency, together with the value of the import transaction in Australian dollars.

While currencies are converted to Australian dollars at exchange rates applicable on the day of shipment, the Australian exporter or importer may undertake the conversion for the actual receipt or payment using a different exchange rate, or one applying on a different day. As well, many exporters and importers hedge transactions and the actual exchange rate applied may differ from that applicable on the shipment date.


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