Customers not selling; money changers say falling rate makes it unprofitable
By Jessica Lim 14 October 2008
It is now more difficult to get the Australian dollar from money changers here.
A Straits Times check of 12 money changers found that 11 had stopped selling the currency.
The reason: Suppliers - larger-scale money changers or banks - have no more stock, said store owners, and customers are not selling due to the low Aussie dollar.
Banks said the situation is likely to persist for the next few days, until new shipments of Aussie notes arrive from Down Under.
Yesterday, the Aussie dollar was trading at 0.9894 to the Singdollar, down from about $1.295 eight months ago. It hit a six-year low of 96.17 Singapore cents on Wednesday last week.
This volatility has led to losses running up to S$3,000 since Friday when stocks dried up, said owners of money changers here.
‘We buy at one price one day, then it falls to a lower price the next. We lose money because we sell at current prices. The more we stock, the more we lose,’ explained Mr Davidsan, owner of Authorised Foreign Money Changer at Lucky Plaza.
The 27-year-old reckons his lone outlet, which sold its last S$5,000-worth of Aussie dollars yesterday morning, has lost S$2,000 over the past three days.
In the meantime, telephones at such stores are ringing off the hook, in tandem with a huge jump in walk-in inquiries. Half the number of money changers The Straits Times approached said they now receive 10 to 40 calls daily from people inquiring about stock availability and current rates, up from about five daily before values fell.
‘These people, they tell me they want to buy now and wait till the value goes up before selling,’ said Mr Muhammad Faroh, 55, who owns Fauzy Gifts Authorised Money Changers. He still stocks the Kiwi dollar and now sells the currency to 20 customers daily, up from five daily a week ago.
Economists said that this is the result of a combination of a sharp fall and people ‘taking the window of opportunity to benefit’. In particular, people are betting that the currency has fallen too far and are stocking up in anticipation that it will recover against the Singdollar.
‘There is a genuine rush in demand because the fall was very steep. It is very possible that banks have run out of the currency as well due to the buying frenzy,’ said Mr Song Seng Wun, a Singapore-based economist with Malaysia’s CIMB.
His advice to consumers: Go down to the bank, the money changer at the airport or change money in Australia.
‘It will become correspondingly more expensive but if consumers need it urgently they have no choice,’ he said.
In the meantime, a major bank - which did not want to be named - admitted that there was a current shortage due to investors who ‘weren’t willing to pare their losses’ when the ‘Aussie dollar fell too sharply last week’.
But the shortage ‘is likely to ease quickly’, said the bank’s spokesman, as the ‘next shipment of notes will come in the next few days’.
Economists, like OCBC’s currency strategist Emmanuel Ng, point out that announcements from European governments about capital injections and recapitalisation of banks in the next few days are likely to unclog global markets.
But he warned that the easing might be slight and transient due to ‘uncertainty in the market and a weaker macroeconomic outlook’ which ‘will continue to weigh on the Aussie dollar’.
In the meantime, tourists heading for Australia from Singapore are finding it hard to get their hands on the currency.
Said Mr Matthew Dharma, 36, who is travelling to Australia next month: ‘I’ve been to six money changers today and they either charge me an unreasonable rate, or just say they have run out of stock. It’s ridiculous.’
1 comment:
Aussie dollars? No stock
Customers not selling; money changers say falling rate makes it unprofitable
By Jessica Lim
14 October 2008
It is now more difficult to get the Australian dollar from money changers here.
A Straits Times check of 12 money changers found that 11 had stopped selling the currency.
The reason: Suppliers - larger-scale money changers or banks - have no more stock, said store owners, and customers are not selling due to the low Aussie dollar.
Banks said the situation is likely to persist for the next few days, until new shipments of Aussie notes arrive from Down Under.
Yesterday, the Aussie dollar was trading at 0.9894 to the Singdollar, down from about $1.295 eight months ago. It hit a six-year low of 96.17 Singapore cents on Wednesday last week.
This volatility has led to losses running up to S$3,000 since Friday when stocks dried up, said owners of money changers here.
‘We buy at one price one day, then it falls to a lower price the next. We lose money because we sell at current prices. The more we stock, the more we lose,’ explained Mr Davidsan, owner of Authorised Foreign Money Changer at Lucky Plaza.
The 27-year-old reckons his lone outlet, which sold its last S$5,000-worth of Aussie dollars yesterday morning, has lost S$2,000 over the past three days.
In the meantime, telephones at such stores are ringing off the hook, in tandem with a huge jump in walk-in inquiries. Half the number of money changers The Straits Times approached said they now receive 10 to 40 calls daily from people inquiring about stock availability and current rates, up from about five daily before values fell.
‘These people, they tell me they want to buy now and wait till the value goes up before selling,’ said Mr Muhammad Faroh, 55, who owns Fauzy Gifts Authorised Money Changers. He still stocks the Kiwi dollar and now sells the currency to 20 customers daily, up from five daily a week ago.
Economists said that this is the result of a combination of a sharp fall and people ‘taking the window of opportunity to benefit’. In particular, people are betting that the currency has fallen too far and are stocking up in anticipation that it will recover against the Singdollar.
‘There is a genuine rush in demand because the fall was very steep. It is very possible that banks have run out of the currency as well due to the buying frenzy,’ said Mr Song Seng Wun, a Singapore-based economist with Malaysia’s CIMB.
His advice to consumers: Go down to the bank, the money changer at the airport or change money in Australia.
‘It will become correspondingly more expensive but if consumers need it urgently they have no choice,’ he said.
In the meantime, a major bank - which did not want to be named - admitted that there was a current shortage due to investors who ‘weren’t willing to pare their losses’ when the ‘Aussie dollar fell too sharply last week’.
But the shortage ‘is likely to ease quickly’, said the bank’s spokesman, as the ‘next shipment of notes will come in the next few days’.
Economists, like OCBC’s currency strategist Emmanuel Ng, point out that announcements from European governments about capital injections and recapitalisation of banks in the next few days are likely to unclog global markets.
But he warned that the easing might be slight and transient due to ‘uncertainty in the market and a weaker macroeconomic outlook’ which ‘will continue to weigh on the Aussie dollar’.
In the meantime, tourists heading for Australia from Singapore are finding it hard to get their hands on the currency.
Said Mr Matthew Dharma, 36, who is travelling to Australia next month: ‘I’ve been to six money changers today and they either charge me an unreasonable rate, or just say they have run out of stock. It’s ridiculous.’
Post a Comment