The Dollar Is Up 8.9% in a Year. Import Prices Rose 6.2% Anyway.

The Australian dollar sat at 66.4 on the Reserve Bank's trade-weighted index on 9 September, up 8.9% on the 61.0 it held a year earlier. Against the US dollar it bought 72.32 US cents, up 9.3% over the same year. ABS data shows import prices rose 6.2% through the year to the June quarter.

Those two movements look like they should cancel out. They do not, and neither figure is wrong. The Import Price Index is a weighted average of everything Australia buys from overseas, and its heaviest categories moved for reasons the currency had no say in.

Where the index actually went

Through the year to June, petroleum and related products rose 67.7%, non-monetary gold rose 24.2% and non-ferrous metals rose 21.5%. Those are world prices, set in markets where Australia is a price taker.

A stronger dollar cuts the Australian dollar cost of a barrel of oil. It does not stop the barrel repricing underneath you.

The categories pulling the other way are more useful to read. Telecommunications equipment fell 11.7% through the year, and articles of apparel and clothing fell 8.7%. Those are manufactured goods bought on contract, where the exchange rate is a large share of the landed price rather than a rounding error next to a commodity benchmark.

The currency gain did reach them. It simply carries too little weight in the index to show up in the headline number.

The rate on the screen is not the rate you get

Where the goods come from matters. Against the euro the dollar bought 0.6216 on 9 September, its strongest level since November 2024 and 10.7% above a year ago.

Against the yen it was 110.85, up 14.1%. Against China's renminbi it was 4.8509, up 3.0%.

A European or Japanese supplier has moved a long way further than a Chinese one, and a single national average describes a currency rather than a purchase order.

Then there is the invoice. When an overseas supplier quotes in Australian dollars, they have picked the conversion rate, and every movement between the quote and the payment belongs to them.

The published rate is the market's. The rate inside the contract is whatever was negotiated.

What to do

Split the import line in your budget. Fuel, metals and anything priced off a world benchmark belong in one group; equipment, componentry, electronics and finished stock in another. Only the second group tracks the currency closely enough to plan around.

Applying one rate of change across both is how a forecast ends up wrong in both directions at once.

Ask for the invoice in the supplier's currency. Then check it against the Reserve Bank's published rate for the day it was issued. If the answer comes out materially worse, a margin has been priced in somewhere, and that is worth raising at the next order rather than at contract renewal.

Find out what your bank or payments provider adds on conversion. A retail spread of 2–3% takes a real bite out of a move this size, and on regular volume it is a negotiable number rather than a fixed fee.

Re-price any quote written before July. A quote for imported machinery built in the June quarter used a different rate. If the order has not shipped, asking costs nothing; the supplier's landed-cost sheet has usually already been updated.

Revisit what you ruled out on price. If a European or Japanese option lost on a spreadsheet 12 months ago, the gap on that spreadsheet has narrowed by a double-digit margin. Freight, parts availability and service coverage still count, but the comparison is worth running again.

A currency level is a fact about today, not a forecast about tomorrow. Whether the saving reaches your business or stops at the supplier comes down to what is written on the invoice.

This article is general information only and is not financial advice.