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5368.0 - International Trade in Goods and Services, Australia, Jun 2014 Quality Declaration 
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FEATURE ARTICLE: EXPORT AND IMPORT INVOICE CURRENCIES, JUNE 2014


INTRODUCTION

Goods exported from and imported into Australia can be invoiced in a range of currencies. This article analyses the major currencies used in these invoices. Initially the article provides a historical comparison of movements of the Australian dollar against selected currencies covering the period from December 2008 to June 2014. It then looks at the following dimensions of the data:

  • Compositional changes in the currencies used to invoice goods exported from and imported into Australia from July 2012 to June 2014
  • Currencies used to invoice exports from and imports into Australia by selected divisions of the Standard International Trade Classification Revision 4 (SITC Rev. 4) for the 2013-14 financial year
  • Historical comparisons of the currencies used to invoice merchandise trade from the 2009-10 financial year through to the 2013-14 financial year.

Similar analyses appeared in the March quarter 1998, March quarter 2001 and March quarter 2003 issues of the discontinued publication, International Merchandise Trade, Australia (cat. no. 5422.0), as well as in the June 2005, December 2007, December 2009 and June 2012 issues of International Trade in Goods and Services, Australia (cat. no. 5368.0).

All values in this article are reported in Australian dollars. The methodology used to measure invoice currencies is described in the appendix.


INVOICE CURRENCY

An invoice currency is the currency in which an invoice for exported or imported goods is denominated. For exports the conversion is undertaken by the Australian Bureau of Statistics (ABS) or the trader using the Reserve Bank of Australia's (RBA) daily exchange rates. For imports, conversion of a foreign invoice currency value to Australian dollars is undertaken by the Australian Customs and Border Protection Service (Customs and Border Protection). Exchange rates applicable at the time of export or import are used for the conversion.

For the purpose of Australian export and import statistics, foreign currencies are converted to the Australian dollar using the exchange rate applicable on the day of shipment. However, trading partners may choose a conversion for payment purposes using a different exchange rate or one applying on a different day if favourable conditions exist. In addition, some exporters and importers hedge exchange rates and calculate the value of the transaction using the hedged exchange rate rather than the prevailing exchange rate. For more detail see the further information section.


EXCHANGE RATES

Graph 1 shows movements in the value of the Australian dollar against selected currencies and the Trade Weighted Index (TWI) from December 2008 to June 2014.

GRAPH 1. MOVEMENTS IN SELECTED EXCHANGE RATES(a)
Graph: GRAPH 1. MOVEMENTS IN SELECTED EXCHANGE RATES(a)


The graph shows that over the period December 2008 to June 2014 the Australian dollar appreciated against the following currencies:
  • United Kingdom pound (GBP) by 23.7%
  • Euro (EUR) by 38.5%
  • United States dollar (USD) by 40.0%
  • Japanese Yen (JPY) by 56.6%.

The Australian dollar depreciated against the New Zealand dollar by 9.6% during the same period. There has been an overall rise against the TWI of 31.7% between December 2008 and June 2014.

Within the six year period, considerable volatility was observed, which subsequently produced four distinct periods of change in the Australian dollar.
  • During the first period, from December 2008 to February 2012, the Australian dollar significantly increased in value against all currencies. This appreciation coincided with the mining boom. However, developments in Europe and the United States and relatively high Australian interest rates (compared with other countries) may have also increased demand for the Australian dollar.
  • The second period was from February 2012 to March 2013. During this period, the Australian dollar’s appreciation rate levelled out, oscillating around a relatively steady exchange rate against most of the selected currencies. The notable exception was the Japanese yen, against which the Australian dollar increased in value.
  • The third period, from March 2013 to January 2014, was characterised by a decline of the Australian dollar against all the major currencies. This period of depreciation coincided with the following occurrences: decreases in Australian interest rates; a downward trend in commodity prices; improvements in the United States housing market; and strengthening of the United States dollar. Whilst there was a sharp increase in all selected exchange rates around October 2013, there was still a clear downward trend overall.
  • The fourth period was from January 2014 to June 2014. In contrast to the third period, the Australian dollar appreciated modestly from January 2014 to June 2014 against all selected currencies. This appreciation occurred despite substantial falls in the prices of significant Australian export commodities.

Table 1 illustrates the movements of the Australian dollar against the selected currencies during the four periods of change.

TABLE 1. MOVEMENTS IN SELECTED EXCHANGE RATES, Percentage change

Dec 2008- Feb 2012
Feb 2012- Mar 2013
Mar 2013- Jan 2014
Jan 2014- Jun 2014

United States dollar
60.3
-3.7
-14.2
5.7
Euro
63.1
-1.8
-18.3
5.9
New Zealand dollar
7.1
-2.9
-14.2
1.3
UK pound sterling
51.5
1.0
-21.5
2.9
Japanese yen
37.9
16.5
-5.9
3.6
Trade Weighted Index
44.0
-0.3
-12.8
5.1



During the period December 2008 to February 2012, the Australian dollar appreciated the most against the Euro (63.1%) and United States dollar (60.3%). February 2012 to March 2013 was a steady period for the value of the Australian dollar with net changes well under 4% for nearly all currencies. The notable exception was the Japanese yen, against which the Australian dollar appreciated a further 16.5%.

Between March 2013 and January 2014, the value of the Australian dollar remained high by historic standards but depreciated against all the major currencies. The highest decreases in value were recorded against the UK pound (-21.5%) and the Euro (-18.3%).

However, between January and June 2014, there have been signs of increased confidence in the Australian currency with modest appreciation against most major currencies. The highest increases in value were recorded against the Euro (5.9%).


EXPORT CURRENCIES

Table 2 shows the Australian dollar value and percentage contribution of the major currencies used to invoice Australian exports of merchandise goods from September quarter 2012 to June quarter 2014.

TABLE 2. INVOICE CURRENCIES FOR EXPORTS - Quarterly

Invoice currency
Sep Qtr 2012
Dec Qtr 2012
Mar Qtr 2013
Jun Qtr 2013
Sep Qtr 2013
Dec Qtr 2013
Mar Qtr 2014
Jun Qtr 2014

VALUE ($m)

United States dollar
51 005
50 782
48 365
54 687
57 729
59 139
58 236
56 651
Australian dollar
9 485
9 478
8 153
9 043
9 104
9 160
8 335
9 486
Euro
320
463
902
537
381
609
870
480
New Zealand dollar
339
358
294
319
408
429
353
374
UK pound sterling
183
186
160
200
230
257
248
239
Japanese yen
293
156
110
160
306
165
134
137
Other
203
226
219
354
252
314
261
238
Total
61 828
61 649
58 202
65 301
68 410
70 074
68 437
67 605

CONTRIBUTION (%)

United States dollar
82.5
82.4
83.1
83.7
84.4
84.4
85.1
83.8
Australian dollar
15.3
15.4
14.0
13.8
13.3
13.1
12.2
14.0
Euro
0.5
0.8
1.5
0.8
0.6
0.9
1.3
0.7
New Zealand dollar
0.5
0.6
0.5
0.5
0.6
0.6
0.5
0.6
UK pound sterling
0.3
0.3
0.3
0.3
0.3
0.4
0.4
0.4
Japanese yen
0.5
0.3
0.2
0.2
0.4
0.2
0.2
0.2
Other
0.3
0.4
0.4
0.5
0.4
0.4
0.4
0.4
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0



Between the September quarter 2012 and June quarter 2014 the United States dollar consistently represented the highest proportion of merchandise export invoices denominated by value. In this period the proportion of exports invoiced in United States dollars increased 1.3 percentage points, with a maximum of 85.1% in the March quarter 2014. The Australian dollar consistently accounted for the second largest proportion but this has been falling in most quarters, with an overall 1.3 percentage point decrease over the period. A notable exception is June 2014, with an increase back to the level recorded in March 2013.

During the same period, the Euro accounted for a relatively small proportion of merchandise export invoices, ranging from 0.5% to 1.5%. Table 2 indicates that there are recent seasonal influences affecting the relatively high share accounted for by the Euro in the March quarters. This recent seasonality can be partially explained by the following two factors: Table 3 in this article shows that 31.2% of the Euro-denominated exports are classified in oil-seeds and oleaginous fruits (SITC 22); and Table 12a. Merchandise exports, standard international trade classification (1 and 2 digit) from the 'Downloads' tab of this publication indicates that there are strong seasonal influences impacting the March quarter. The New Zealand dollar, United Kingdom pound and Japanese yen each accounted for less than 1%, with less than half a percentage point variation between the eight quarters.

'Other' currencies accounted for between 0.3% and 0.5% of Australian merchandise exports during the period. 'Other' currencies include the Canadian dollar, Singapore dollar and Chinese renminbi.


EXPORT COMMODITIES BY CURRENCY

Table 3 lists the major currencies used to invoice Australian exports by selected SITC Rev. 4 divisions (2 digit) for the 2013-14 financial year.

TABLE 3. EXPORT INVOICE CURRENCIES FOR SELECTED SITC REV. 4 DIVISIONS(a), Contributions - 2013-14

Value
USD
AUD
EUR
NZD
GBP
JPY
Other
SITC code description
$m
%
%
%
%
%
%
%

01 Meat and meat preparations
9 871
55.5
39.8
0.6
0.3
1.7
0.5
1.6
02 Dairy products and birds’ eggs
2 650
78.8
20.5
-
0.1
0.1
-
0.5
04 Cereals and cereal preparations
9 319
88.9
8.4
0.8
0.3
-
1.4
0.1
05 Vegetables and fruit
2 436
56.7
41.6
0.7
0.1
0.1
0.6
0.2
11 Beverages
2 070
16.6
63.7
2.6
1.9
8.5
0.5
6.1
22 Oil-seeds and oleaginous fruits
2 138
54.0
8.7
34.2
-
-
-
3.2
26 Textile fibres (excl. wool tops and other combed wool) and their wastes, not manufactured into yarn or fabric
4 885
79.9
16.4
1.6
-
0.3
1.8
0.1
28 Metalliferous ores and metal scrap
97 404
99.0
1.0
-
-
-
-
-
32 Coal, coke and briquettes
40 255
99.9
0.1
-
-
-
-
-
33 Petroleum, petroleum products and related materials
13 259
84.7
15.3
-
-
-
-
-
34 Gas, natural and manufactured
17 712
81.0
19.0
-
-
-
-
-
54 Medicinal and pharmaceutical products
3 363
12.8
72.6
1.7
4.4
0.2
0.9
7.4
68 Non-ferrous metals
10 536
95.0
4.9
-
-
0.1
-
0.1
72 Machinery specialized for particular industries
1 926
26.8
65.4
4.5
1.6
0.5
0.2
1.0
74 General industrial machinery and equipment, n.e.s., and machine parts, n.e.s.
1 928
21.8
67.5
5.8
1.9
1.7
0.1
1.3
78 Road vehicles (incl. air-cushion vehicles)
3 118
59.0
30.2
0.9
9.1
0.7
0.1
0.1
79 Transport equipment (excl. road vehicles)
2 035
42.0
45.5
6.0
0.1
2.0
-
4.5
87 Professional, scientific and controlling instruments and apparatus, n.e.s.
1 976
47.3
32.7
12.0
3.8
2.8
0.7
0.8
89 Miscellaneous manufactured articles, n.e.s.
2 436
30.3
47.3
2.9
5.4
10.5
0.6
3.0
97 Gold, non-monetary (excl. gold ores and concentrates)
13 263
97.7
2.3
-
-
-
-
-
Other
31 948
56.8
36.6
1.9
2.4
0.5
1.2
0.6
Total
274 525
84.4
13.1
0.9
0.6
0.4
0.3
0.4

- nil or rounded to zero (including null cells)
(a) Some SITC divisions exclude commodities subject to a confidentiality restriction. These are included in Other.


The United States dollar was the most frequently used invoice currency for the majority of the above SITC Rev. 4 divisions. Almost 100% of coal, coke and briquettes (SITC 32), 99.0% of metalliferous ores and metal scrap (SITC 28) and 97.7% of gold, non-monetary (excl. gold ores and concentrates) (SITC 97) were invoiced in United States dollars. Similar to findings in the previous issue of this feature article, the United States dollar was the primary currency used to invoice exports in fourteen of the twenty largest SITC Rev. 4 divisions denominated by value.

For six of the twenty largest export SITC Rev. 4 divisions, the Australian dollar was the most used export invoice currency. Invoicing in Australian dollars accounted for:
  • 72.6% of medicinal and pharmaceutical products (SITC 54)
  • 67.5% of general industrial machinery and equipment, n.e.s., and machine parts, n.e.s. (SITC 74)
  • 65.4% of machinery specialized for particular industries (SITC 72)
  • 63.7% of beverages (SITC 11)
  • 47.3% of miscellaneous manufactured articles, n.e.s. (SITC 89)
  • 45.5% of transport equipment (excl. road vehicles) (SITC 79).

Merchandise exports invoiced in the Euro had two substantial contributions of 34.2% and 12.0% for oil-seeds and oleaginous fruits (SITC 22) and professional, scientific and controlling instruments and apparatus, n.e.s. (SITC 87) respectively. Merchandise exports invoiced in the United Kingdom pound also had two notable contributions of 10.5% for miscellaneous manufactured articles, n.e.s. (SITC 89) and 8.5% for beverages (SITC 11). Similarly, 9.1% of road vehicles (incl. air-cushion vehicles) (SITC 78) exports were invoiced in New Zealand dollars and 7.4% of medicinal and pharmaceutical products (SITC 54) were invoiced in 'Other' currencies.


IMPORT CURRENCIES

Table 4 shows the Australian dollar value and percentage contribution of currencies used to invoice Australian imports of merchandise goods from September quarter 2012 to June quarter 2014.

TABLE 4. INVOICE CURRENCIES FOR IMPORTS - Quarterly

Invoice currency
Sep Qtr 2012
Dec Qtr 2012
Mar Qtr 2013
Jun Qtr 2013
Sep Qtr 2013
Dec Qtr 2013
Mar Qtr 2014
Jun Qtr 2014

VALUE ($m)

United States dollar
34 487
35 510
29 832
31 472
36 781
36 450
34 966
34 997
Australian dollar
19 051
19 425
17 586
18 091
19 308
19 219
17 248
18 246
Euro
4 358
4 949
4 239
4 365
5 328
4 960
5 693
4 920
New Zealand dollar
613
675
588
604
636
724
595
639
UK pound sterling
772
727
605
619
799
687
667
687
Japanese yen
967
847
791
778
781
808
832
772
Other
1 145
1 334
1 123
1 105
1 320
1 468
1 295
1 313
Total
61 395
63 469
54 765
57 034
64 952
64 317
61 296
61 574

CONTRIBUTION (%)

United States dollar
56.2
56.0
54.5
55.2
56.6
56.7
57.0
56.8
Australian dollar
31.0
30.6
32.1
31.7
29.7
29.9
28.1
29.6
Euro
7.1
7.8
7.7
7.7
8.2
7.7
9.3
8.0
New Zealand dollar
1.0
1.1
1.1
1.1
1.0
1.1
1.0
1.0
UK pound sterling
1.3
1.1
1.1
1.1
1.2
1.1
1.1
1.1
Japanese yen
1.6
1.3
1.4
1.4
1.2
1.3
1.4
1.3
Other
1.9
2.1
2.1
1.9
2.0
2.3
2.1
2.1
Total
100.0
100.0
100.0
100.0
100.0
100.0
100.0
100.0



Between the September quarter 2012 and June quarter 2014, the United States dollar consistently represented the highest proportion of merchandise import invoices denominated by value. In this period goods invoiced in the United States dollar decreased from 56.2% in September 2012 to 54.5% in March quarter 2013, then recovered, peaking at 57.0% in the March quarter 2014.

The Australian dollar consistently accounted for the second largest proportion of import invoices. The proportion has decreased from a high of 31.0% in the September quarter 2012 to 28.1% in March quarter 2014. However, the June quarter 2014 showed an increase to 29.6%. As was the case for exports, the percentage of merchandise imports invoiced in Australian dollars has generally moved inversely to the percentage invoiced in United States dollars over the same period.

The proportion invoiced in the Euro has increased from 7.1% to 9.3% throughout the September quarter 2012 to March quarter 2014 period, before falling to 8.0% in the June quarter 2014. 'Other' currencies not specifically selected accounted for between 1.9% and 2.3% of Australian merchandise imports during this time. 'Other' currencies include the Papua New Guinea kina, Swiss franc, Singapore dollar and Canadian dollar.


IMPORT COMMODITIES BY CURRENCY

Table 5 lists the major currencies used to invoice Australian imports by selected SITC Rev. 4 divisions (2 digit) for the 2013-14 financial year.

TABLE 5. IMPORT INVOICE CURRENCIES FOR SELECTED SITC REV. 4 DIVISIONS(a), Contributions - 2013-14

Value
USD
AUD
EUR
NZD
GBP
JPY
Other
SITC code description
$m
%
%
%
%
%
%
%

33 Petroleum, petroleum products and related materials
41 761
99.7
0.2
0.1
-
-
-
-
54 Medicinal and pharmaceutical products
10 182
13.8
80.7
3.2
0.3
0.5
0.1
1.3
62 Rubber manufactures, n.e.s.
3 533
41.3
49.0
5.9
0.2
0.5
1.9
1.2
67 Iron and steel
4 069
68.6
20.1
7.9
0.1
0.6
1.2
1.5
69 Manufactures of metals, nes
7 718
56.9
23.5
11.6
0.8
1.7
0.6
4.9
71 Power generating machinery and equipment
4 955
50.1
13.6
27.3
0.4
3.5
3.3
1.8
72 Machinery specialized for particular industries
7 236
41.9
19.9
22.4
0.8
4.0
7.0
3.9
74 General industrial machinery and equipment, n.e.s., and machine parts, n.e.s.
15 610
42.8
29.7
20.4
0.7
1.9
2.0
2.5
75 Office machines and automatic data processing machines
9 690
73.3
21.2
1.4
0.3
0.3
2.9
0.5
76 Telecommunications and sound recording and reproducing apparatus and equipment
11 561
55.6
39.8
2.8
0.3
0.7
0.3
0.6
77 Electrical machinery, apparatus and appliances, n.e.s., and electrical parts thereof (incl. non electrical counterparts, n.e.s., of electrical household type equipment)
11 720
54.4
28.5
11.0
0.6
1.8
0.7
3.1
78 Road vehicles (incl. air-cushion vehicles)
28 987
10.9
77.0
7.2
0.2
0.5
3.6
0.6
79 Transport equipment (excl. road vehicles)
3 468
41.2
14.9
38.0
0.4
1.1
0.5
3.9
82 Furniture and parts thereof; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings
3 438
76.6
9.3
8.9
0.5
0.6
0.2
3.9
84 Articles of apparel and clothing accessories
7 177
78.8
12.9
3.1
0.6
0.7
0.1
3.8
87 Professional, scientific and controlling instruments and apparatus, n.e.s.
5 654
44.4
32.5
14.2
0.7
3.2
1.5
3.4
89 Miscellaneous manufactured articles, n.e.s.
11 547
53.5
30.1
8.2
1.5
2.2
0.7
3.9
97 Gold, non-monetary (excl. gold ores and concentrates)
4 767
70.0
2.3
0.2
11.7
-
-
15.7
Other
59 066
58.4
25.6
9.4
2.2
1.4
0.7
2.4
Total
252 139
56.8
29.4
8.3
1.0
1.1
1.3
2.1

- nil or rounded to zero (including null cells)
(a) Some SITC divisions exclude commodities subject to a confidentiality restriction. These are included in Other.


The United States dollar was the most used currency in invoices for fifteen of the eighteen SITC Rev. 4 divisions identified above. Almost 100% of petroleum, petroleum products and related materials (SITC 33), 78.8% of articles of apparel and clothing accessories (SITC 84) and 76.6% of furniture and parts thereof; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings (SITC 82) were invoiced in United States dollars.

For the other three SITC Rev. 4 divisions listed, the Australian dollar was the most used import invoice currency. Invoicing in Australian dollars accounted for 80.7% of medicinal and pharmaceutical products (SITC 54), 77.0% of road vehicles (incl. air-cushion vehicles) (SITC 78) and 49.0% of rubber manufactures, n.e.s. (SITC 62).

The Euro was the third most significant import invoice currency accounting for: 38.0% of transport equipment (excl. road vehicles) (SITC 79); 27.3% of power generating machinery and equipment (SITC 71); and 22.4% of machinery specialized for particular industries (SITC 72).

Merchandise imports invoiced in New Zealand dollars also had one relatively significant contribution of 11.7% for gold, non-monetary (excl. gold ores and concentrates) (SITC 97).

When compared with the 2011-12 data presented in the previous feature article, the composition of the largest eighteen SITCs was broadly consistent. However, within certain SITCs there were some notable shifts. Of particular note were increases to the use of the Euro for power generating machinery and equipment (SITC 71) and transport equipment (excl. road vehicles) (SITC 79). For SITC 71, the increase in the use of the Euro was mostly balanced by a decrease in the use of United States dollars. For SITC 79, the increase was matched by a similar size proportional decrease in the use of Australian dollars.


RECENT YEARS COMPARISON FOR EXPORTS

Table 6 shows the proportion of exports invoiced in the major currencies in the last five financial years from 2009-10 to 2013-14.

TABLE 6. INVOICE CURRENCIES FOR EXPORTS, Financial year

2009-10
2010-11
2011-12
2012-13
2013-14
Invoice currency
%
%
%
%
%

United States dollar
80.4
83.5
84.0
82.9
84.4
Australian dollar
17.0
14.1
13.7
14.6
13.1
Euro
0.8
0.9
1.0
0.9
0.9
New Zealand dollar
0.8
0.6
0.5
0.5
0.6
UK pound sterling
0.4
0.3
0.3
0.3
0.4
Japanese yen
0.4
0.3
0.3
0.3
0.3
Other
0.3
0.3
0.3
0.4
0.4
Total
100.0
100.0
100.0
100.0
100.0
Total Exports $m
200 720
245 724
264 027
246 980
274 525



Graph 2 shows the major movements in the currencies used for invoicing exports as a percentage of the total in the past five financial years from 2009-10 to 2013-14.

GRAPH 2. INVOICE CURRENCY, EXPORTS PERCENTAGES
Graph: GRAPH 2. shows the percentage of invoice currency movements for exports in the US dollar, Australian Dollar, European Euro and other Currencies.


The United States dollar is consistently the most used currency for export invoicing, followed by the Australian dollar and the Euro. From Graph 2, an inverse relationship between the Australian dollar and United States dollar is apparent. The overall trend over the five years observed indicates a shift towards an increased use of the United States dollar for export invoicing, and conversely, a decrease in the use of the Australian dollar. From 2009-10 there was an upward trend in the use of the United States dollar until 2011-12. There was a notable decline in the use of the United States dollar for export invoices between 2011-12 and 2012-13, mirrored by an increased use of the Australian dollar. However, between 2012-13 and 2013-14 the use of the United States dollar fully recovered its upward momentum.

From 2009-10 to 2013-14 the share accounted for by the Euro remained fairly constant whilst 'Other' currencies decreased slightly. The 'Other' currencies driving the decrease were the New Zealand dollar, United Kingdom pound and Japanese yen.


RECENT YEARS COMPARISON FOR IMPORTS

Table 7 shows the proportion of imports invoiced in the major currencies in the last five financial years from 2009-10 to 2013-14.

TABLE 7. INVOICE CURRENCIES FOR IMPORTS, Financial year

2009-10
2010-11
2011-12
2012-13
2013-14
Invoice currency
%
%
%
%
%

United States dollar
51.6
55.0
56.4
55.5
56.8
Australian dollar
34.4
32.0
30.6
31.3
29.4
Euro
7.8
7.1
7.0
7.6
8.3
New Zealand dollar
1.2
1.1
1.0
1.0
1.0
UK pound sterling
1.1
1.0
1.2
1.2
1.1
Japanese yen
1.9
1.8
1.9
1.4
1.3
Other
2.1
2.0
2.0
2.0
2.1
Total
100.0
100.0
100.0
100.0
100.0
Total Imports $m
204 022
214 152
239 951
236 662
252 139



Graph 3 shows the major movements in the currencies used for invoicing imports as a percentage of the total for the past five financial years from 2009-10 to 2013-14.

GRAPH 3. INVOICE CURRENCIES, IMPORTS PERCENTAGES
 Graph: GRAPH 3. shows the percentage of invoice currency movements for imports in the US dollar, Australian Dollar, European Euro and other Currencies.


The data shows that the United States dollar is consistently the most used currency for import invoicing, followed by the Australian dollar and the Euro. Similarly to Graph 2 there is an apparent inverse relationship between the share of trade accounted for by the Australian dollar and United States dollar. As with exports, the percentages suggest an increase in the use of the United States dollar and a decreased in the use of the Australian dollar for import invoicing. Of the five years, 2012-13 was the only financial year where the proportion accounted for by the United States dollar decreased. In contrast, 2012-13 was the only financial year in which the share accounted for by the Australian dollar increased.

There are many possible factors that would influence the incentive for an importer to invoice in one currency over another. One of these factors could be the value of one currency against another. For example, if the Australian dollar depreciates against the United States dollar, Australian consumers find imports invoiced in Australian dollars relatively more attractive than imports invoiced in United States dollars. Therefore it is reasonable to assume that an importer's choice of invoice currency could be influenced by movements in the exchange rates. Graph 1 shows there was some depreciation of the Australian dollar against the United States dollar between 2011-12 and 2012-13. Between the same periods, Graph 3 indicates a reduction in the use of the United States dollar for import invoicing. These occurrences could be influenced by the logic described at the top of this paragraph.

The use of the Euro in invoices slightly decreased from 2009-10 to 2011-12, which may be due to a combination of factors including, but not exclusive to, the relative decrease in trade with Europe and the perceived instability of the Euro. However, between 2011-12 and 2013-14, the use of the Euro in import invoices moderately increased. Currencies grouped as 'Other' in the graph showed insignificant change in their use in import invoices over the five year period.


FURTHER INFORMATION

A feature article, The Terms of Trade and the National Accounts, released with the December quarter 2004 issue of Australian National Accounts: National Income, Expenditure and Product, Australia (cat. no. 5206.0) discusses, amongst other things, how exchange rates can influence the terms of trade.

For information on the Reserve Bank of Australia's (RBA) methodology of compiling the TWI see the article Developments in the Trade-Weighted Index Reserve Bank of Australia Bulletin October 2002 on the RBA website <www.rba.gov.au>.

For more information about hedging activity undertaken by importers and exporters in 2013, refer to Foreign Currency Exposure, Australia, March Quarter 2013 (cat. no. 5308.0).

If you require further information about the Export and import invoice currencies, June 2014 feature article, please contact the International Trade section on Canberra (02) 6252 5409 or email
international.trade@abs.gov.au. The ABS Privacy Policy outlines how the ABS will handle any personal information that you provide to us.


APPENDIX

Measurement of Invoice Currencies

Information on the invoice currencies used in export and import transactions is collected by Customs and Border Protection and passed on to the ABS with other merchandise trade information required for statistical purposes.

For exports, the ABS converts values reported in foreign currencies to Australian dollars using a representative mid-point of the buy and sell rates on the date of departure of the goods from Australia. The trader may report to Customs and Border Protection in Australian dollars.

For imports, Customs and Border Protection converts values reported in foreign currencies to Australian dollars using exchange rates applicable on the date of departure of the goods from the overseas country. The ABS receives details of the invoice currency together with the value of the import transaction in Australian dollars.

Some factors may complicate the measurement of invoice currencies. In Australian export and import statistics foreign currencies are converted to the Australian dollar using the exchange rate applicable on the day of shipment. Some trading partners may undertake the conversion for payment purposes using a different exchange rate or one applicable on a different day. Additionally, some exporters and importers hedge exchange rates and calculate the value of the transaction using the hedged exchange rate rather than the prevailing exchange rate (see the further information section for more details about hedging activity).


ROUNDING

Where figures have been rounded, discrepancies may occur between sums of the component items and totals. Percentage movements are calculated from data at the level of precision presented in this publication (i.e. $m) except for international merchandise trade tables.


ABBREVIATIONS


$m million dollars
ABS Australian Bureau of Statistics
EUR Euro
excl. excluding
GBP United Kingdom pound sterling
incl. including
JPY Japanese yen
n.e.s. not elsewhere specified
NZD New Zealand dollar
SITC Rev. 4 Standard International Trade Classification Revision 4
TWI Trade Weighted Index
USD United States dollar




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