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EXPORT AND IMPORT INVOICE CURRENCIES, DEC 2007


INTRODUCTION

Goods imported into and exported from Australia can be invoiced in a range of currencies. This article analyses the major currencies used in these invoices. In particular, this article looks at:

• Compositional changes in the currencies used to invoice goods imported into and exported from Australia for the five quarters from December quarter 2006 to December quarter 2007.
• The currencies used to invoice imports into and exports from Australia by selected divisions of the Standard International Trade Classification Revision 3 (SITC Rev 3).
• Comparisons of the currencies used to invoice merchandise trade from the 2004 calendar year through to the 2007 calendar year.

All values in this article are reported in Australian dollars. Details about the measurement of invoice currencies are provided as an appendix to this article.

EXCHANGE RATES

Graph 1 shows movements in the value of the Australian dollar against selected currencies and the movement in the Trade Weighted Index (TWI) from December 2004 to December 2007. The graph shows that the Australian dollar has appreciated substantially against the currencies of most of Australia's major trading partners over this period, particularly against the Japanese yen.

Over this period the Australian dollar appreciated against:

• the Japanese yen (JPY) by 23%
• the United States dollar (USD) by 13%
• the United Kingdom pound sterling (GBP) by 9%
• the New Zealand dollar (NZD) by 5%
• the Euro (EUR) by 5%.

GRAPH 1. MOVEMENTS IN SELECTED EXCHANGE RATES

For the purpose of producing Australian import and export statistics, foreign currencies are converted to the Australian dollar using the exchange rate applicable on the day of shipment. However, these statistics may differ from actual payments as trading partners may undertake the conversion for payment purposes using a different exchange rate or one applying on a different day. 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.

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

EXPORT CURRENCIES

Table 1 lists the major currencies used to invoice Australian exports of merchandise goods during a five quarter period, beginning December quarter 2006 and ending December quarter 2007.

TABLE 1. INVOICE CURRENCIES FOR EXPORTS
Invoice currency	Dec Qtr 2006	Mar Qtr 2007	Jun Qtr 2007	Sep Qtr 2007	Dec Qtr 2007
VALUE ($m)
USD	32 577	30 171	32 044	31 964	31 946
AUD	9 075	8 311	8 955	9 144	9 529
EUR	451	349	408	381	421
NZD	402	354	403	431	453
GBP	298	329	355	385	322
JPY	327	182	171	360	221
Other	110	111	104	137	128
Total	43 239	39 806	42 439	42 802	43 020
CONTRIBUTION (%)
USD	75.3	75.8	75.5	74.7	74.3
AUD	21.0	20.9	21.1	21.4	22.2
EUR	1.0	0.9	1.0	0.9	1.0
NZD	0.9	0.9	0.9	1.0	1.1
GBP	0.7	0.8	0.8	0.9	0.7
JPY	0.8	0.5	0.4	0.8	0.5
Other	0.3	0.3	0.2	0.3	0.3
Total	100.0	100.0	100.0	100.0	100.0

The group of currencies classified as "Other" in the above table in total accounted for approximately 0.3% of Australian merchandise exports over this period. The main currencies in this '"Other" group include the Singapore dollar, Hong Kong dollar and Thai baht.

EXPORT COMMODITIES

Table 2 lists the major currencies used to invoice Australian exports by selected SITC Rev 3 divisions (2 digit) for the 2007 calendar year.

TABLE 2. EXPORT INVOICE CURRENCIES FOR SELECTED SITC Rev 3 DIVISONS(a), Percentage Contributions - For calendar year 2007
	Value	USD	AUD	EUR	NZD	GBP	JPY	Other
SITC code description	($m)	(%)	(%)	(%)	(%)	(%)	(%)	(%)
28 Metalliferous ores and metal scrap	35 330	95.3	4.7	-	-	-	-	-
32 Coal, coke and briquettes	20 878	94.3	5.6	-	-	-	-	-
68 Non-ferrous metals	13 648	93.4	6.5	-	-	-	-	-
97 Gold, non-monetary (excl. gold ores and concentrates)	11 344	98.9	1.1	-	-	-	-	-
33 Petroleum, petroleum products and related materials	11 183	85.8	14.1	-	-	-	-	-
01 Meat and meat preparations	6 630	51.5	42.9	0.7	0.4	0.9	2.9	0.7
34 Gas, natural and manufactured	6 123	82.1	17.9	-	-	-	-	-
78 Road vehicles (incl. air-cushion vehicles)	4 072	63.3	24.8	0.6	10.6	0.6	0.1	-
54 Medicinal and pharmaceutical products	3 934	9.3	77.9	2.3	3.5	4.9	0.4	1.7
04 Cereals and cereal preparations	3 365	85.5	13.2	0.1	0.2	0.1	0.6	0.2
26 Textile fibres and their wastes (not manufactured into yarn or fabric)	3 341	57.7	38.5	3.3	-	0.3	0.1	-
11 Beverages	3 101	5.0	71.7	2.0	1.9	16.9	0.2	2.3
02 Dairy products and birds' eggs	2 439	74.3	24.2	0.3	-	0.2	1.0	-
89 Miscellaneous manufactured articles, n.e.s.	2 353	21.8	58.0	2.7	6.9	8.1	0.4	2.0
77 Electrical machinery, apparatus, appliances, parts (incl. non-electrical counterparts of electrical domestic equipment)	1 857	30.3	58.3	5.5	2.1	3.2	0.2	0.4
87 Professional, scientific and controlling instruments and apparatus, n.e.s.	1 810	42.0	37.4	11.4	2.5	3.2	1.2	2.2
72 Machinery specialised for particular industries	1 719	24.6	69.2	3.2	1.4	0.9	-	0.6
74 General industrial machinery and equipment, n.e.s. and machine parts, n.e.s.	1 665	20.5	73.3	2.6	1.0	1.9	0.2	0.4
93 Special transactions and commodities not classified according to kind	1 350	30.1	61.5	0.5	7.0	0.2	0.1	0.6
05 Vegetables and fruit	1 291	35.5	59.0	1.0	1.7	0.6	1.5	0.7
Other	30 633	57.4	35.3	2.3	1.9	0.6	2.0	0.5
Total	168 067	75.0	21.4	0.9	1.0	0.8	0.6	0.3
- nil or rounded to zero (including null cells)
(a) Some SITC sections and division exclude commodities subject to a confidentiality restriction. These are included in Other.

Nine of the 10 largest commodity groups exported during 2007 were primarily invoiced in United States dollars. Of these, the four largest commodity groups had over 90% of their value invoiced in United States dollars, namely:

• 99% of exports of gold, non-monetary (excl. gold ores and concentrates) (SITC 97)
• 95% of exports of metalliferous ores and metal scrap (SITC 28)
• 94% of exports of coal, coke and briquettes (SITC 32)
• 93% of exports of non-ferrous metals (SITC 68).

• 78% of exports of medicinal and pharmaceutical products (SITC 54)
• 73% of exports of general industrial machinery and equipment, n.e.s and machine parts (SITC 74)
• 72% of exports of beverages (SITC 11).

TABLE 3. INVOICE CURRENCIES FOR IMPORTS
Invoice currency	Dec Qtr 2006	Mar Qtr 2007	Jun Qtr 2007	Sep Qtr 2007	Dec Qtr 2007
VALUE ($ million)
USD	23 977	21 920	23 446	24 596	26 207
AUD	15 565	15 322	15 516	15 907	17 083
EUR	4 025	3 829	3 800	3 871	4 094
NZD	506	424	464	499	535
GBP	668	741	689	698	701
JPY	1 013	942	919	937	962
Other	926	831	830	1 158	847
Total	46 678	44 008	45 663	47 666	50 429
CONTRIBUTION (%)
USD	51.4	49.8	51.3	51.6	52.0
AUD	33.3	34.8	34.0	33.4	33.9
EUR	8.6	8.7	8.3	8.1	8.1
NZD	1.1	1.0	1.0	1.0	1.1
GBP	1.4	1.7	1.5	1.5	1.4
JPY	2.2	2.1	2.0	2.0	1.9
Other	2.0	1.9	1.8	2.4	1.7
Total	100.0	100.0	100.0	100.0	100.0

The group of currencies classified as "Other" in the above table in total accounted for about 2% of Australian merchandise imports. The main currencies in this "Other" group include the Singapore dollar, Hong Kong dollar and Thai baht which were the same main currencies in the "Other" group for exports.

IMPORT COMMODITIES

Table 4 lists the major currencies used to invoice Australian imports by selected SITC Rev 3 divisions (2 digit) for the 2007 calendar year.

TABLE 4. IMPORT INVOICE CURRENCIES FOR SELECTED SITC Rev 3 DIVISIONS(a), Percentage Contributions - For calendar year 2007
	Value	USD	AUD	EUR	NZD	GBP	JPY	Other
SITC code description	($m)	(%)	(%)	(%)	(%)	(%)	(%)	(%)
78 Road vehicles (incl. air-cushion vehicles)	24 310	12.9	74.7	7.2	0.2	0.6	4.1	0.3
33 Petroleum, petroleum products and related materials	23 316	99.7	0.2	0.1	-	-	-	-
76 Telecommunications and sound recording and reproducing apparatus and equipment	10 214	39.9	52.6	2.9	0.3	1.0	2.9	0.5
74 General industrial machinery and equipment, n.e.s. and machine parts, n.e.s.	9 923	37.7	30.1	21.8	1.0	2.0	4.1	3.4
75 Office machines and automatic data processing machines	9 669	71.8	22.5	1.5	0.3	0.6	2.5	0.8
89 Miscellaneous manufactured articles, n.e.s.	9 441	40.8	40.2	8.4	1.7	3.9	1.1	4.0
77 Electrical machinery, apparatus, appliances, parts (incl. non-electrical counterparts of electrical domestic equipment	8 990	48.6	32.4	12.1	0.8	2.4	1.3	2.4
54 Medicinal and pharmaceutical products	7 981	13.4	79.8	3.9	0.4	1.5	0.1	1.0
72 Machinery specialised for particular industries	7 091	37.4	21.3	24.2	0.9	4.2	8.9	3.2
97 Gold, non-monetary (excl. gold ores and concentrates)	6 128	89.6	1.6	0.1	3.7	-	-	5.0
69 Manufactures of metals, n.e.s.	4 695	52.8	26.4	13.5	1.2	1.6	0.9	3.5
84 Articles of apparel and clothing accessories	4 467	65.3	23.2	3.4	1.1	0.6	0.2	6.3
87 Professional,scientific and controlling instruments and apparatus, n.e.s.	4 224	40.4	33.7	15.2	0.9	4.4	1.9	3.6
79 Transport equipment (excl. road vehicles)	4 181	70.6	15.0	8.0	0.7	4.2	0.1	1.4
71 Power generating machinery and equipment	3 952	45.9	23.3	17.1	0.7	3.6	4.1	5.3
67 Iron and steel	3 773	66.2	25.0	5.4	0.3	0.8	1.6	0.7
51 Organic materials	3 381	42.7	52.9	2.8	0.1	0.9	0.4	0.2
64 Paper, paperboard, and articles of paper pulp, of paper or of paperboard	2 752	31.9	52.0	8.7	4.4	0.5	0.4	2.1
65 Textiles yarn, fabrics, made up articles n.e.s. and related products	2 474	62.7	19.4	10.7	3.5	1.7	0.9	1.2
62 Rubber manufactures, n.e.s.	2 462	36.2	50.3	7.8	0.3	0.8	3.6	1.1
Other	34 342	53.8	27.0	11.3	2.1	1.8	1.4	2.6
Total	187 765	51.2	34.0	8.3	1.0	1.5	2.0	2.0
- nil or rounded to zero (including null cells)
(a) Some SITC sections and division exclude commodities subject to a confidentiality restriction. These are included in Other.

The United States dollar was the currency most used in invoices for the majority of the above SITC commodity groupings. Almost 100% of imports of petroleum, petroleum products and related materials (SITC 33), 90% of gold, non-monetary (excl. gold ores and concentrates) (SITC 97) and 72% of imports of office machines and automatic data processing machines (SITC 75) were invoiced in United States dollars.

For a small number of commodity groups the Australian dollar was the most used import invoice currency. Invoicing in Australian dollars accounted for 75% of imports of road vehicles (incl.air cushion vehicles) (SITC 78), 80% of medicinal and pharmaceutical products (SITC 54), 53% of organic materials (SITC 51) and 53% of telecommunications and sound recording and reproducing apparatus and equipment (SITC 76).

The Euro was the third most significant import invoice currency accounting for 24% of machinery specialised for particular industries (SITC 72), 22% of imports of general industrial machinery and equipment n.e.s. and machine parts, n.e.s. (SITC 74) and 17% of imports of power generating machinery and equipment (SITC 71).

RECENT YEARS COMPARISON

Table 5 shows the proportion of exports and imports invoiced in the major currencies in the last four calendar years from 2004 to 2007.

TABLE 5: EXPORTS AND IMPORTS
	2004	2005	2006	2007
Invoice currency	%	%	%	%
EXPORTS
USD	69.4	72.6	75.4	75.0
AUD	26.2	23.5	21.1	21.4
EUR	1.3	1.1	1.0	0.9
NZD	1.2	1.1	0.8	1.0
GBP	1.0	0.8	0.7	0.8
JPY	0.8	0.7	0.7	0.6
Other	0.1	0.3	0.3	0.3
Total	100.0	100.0	100.0	100.0
Total exports ($m)	117 887	139 079	163 754	168 067
IMPORTS
USD	49.8	51.6	52.9	51.2
AUD	32.1	31.7	32.1	34.0
EUR	9.1	8.9	8.2	8.3
NZD	1.3	1.2	1.1	1.0
GBP	1.9	1.7	1.4	1.5
JPY	2.8	2.6	2.3	2.0
Other	3.0	2.4	2.0	2.0
Total	100.0	100.0	100.0	100.0
Total Imports ($m)	141 247	155 729	176 090	187 765

The proportion of imports invoiced in United States dollars increased slightly from 50% in 2004 to 51% in 2007 with a peak of 53% in 2006, while those invoiced in Australian dollars grew from 32% in 2004 to 34% in 2007. The proportion of imports invoiced in each of the other currencies decreased slightly over the four year period. In 2007 approximately 8% of Australia's merchandise imports were invoiced in the Euro, 2% were invoiced in each of the United Kingdom pound sterling and Japanese yen, and 1% in the New Zealand dollar. The group of currencies classified as "Other" accounted for 2% of Australian merchandise imports.

ABBREVIATIONS

APPENDIX

MEASUREMENT of INVOICE CURRENCIES

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 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.

For imports, Customs 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.

For the purpose of Australian import and export statistics, foreign currencies are converted to the Australian dollar using the exchange rate applicable on the date of shipment. However, trading partners may undertake the conversion for payment purposes using a different exchange rate or one applying on a different day. 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 information about hedging activity undertaken by importers and exporters in 2005, refer to Foreign Currency Exposure, Australia, March 2005 (cat. no. 5308.0)

For exports prior to October 2004, Customs only permitted goods to be invoiced in a relatively small number of currencies. In October 2004, the range of currencies allowed on export documents was increased to 28. As transactions in non-permitted currencies are converted to Australian dollars by the exporter, the increase in the number of permitted currencies may have reduced the proportion of export invoices reported in Australian dollars for December quarter 2004 and following quarters.