Simon Conn from Investors Mutual shares some insight into the role of currency in their investment process

Simon Conn from Investors Mutual shares some insight into the role of currency in their investment process. Generally, we prefer to invest in companies which can grow through self-help initiatives such as market share gains, cost outs, restructuring or through accretive acquisitions. Rarely would we invest in a company whose fortunes are overly tied to currency or some other macro thematic...A lower AUD will rebalance our domestic economy, with some sectors losing and others winning. For example, the retail sector can either absorb higher prices for imported goods which will hurt profit margins, or they can try to push through price increases at a time when consumer confidence is already fragile. On the other hand, a lower AUD provides local producers some relief from import competition. With Australian wages and other costs having increased substantially over recent years (especially compared to our major trading partners), the fall in the AUD helps local producers compete on a more level playing field. The lower AUD will also partially ameliorate the impact of falling commodity prices.