AS THE CURRENCY SINKS BANKS LEARN TO SWIM
Large Australian banks and corporates, caught napping when the
Australian dollar plummeted in February last year, have prepared
themselves for the dollar's latest drop from about 74 cents to
about 61. They are finding the road to salvation in sharply-increased
professionalism, specialized treasury operations, the Euro-Australian
dollar bond market and domestic hedging products.
Some, however, are still floundering -- particularly the government
authorities which find it easier to procrastinate rather than solve
their long-term problems.
The Australian dollar's latest collapse has dispelled any
lingering belief among Australian borrowers that low-coupon foreign
currency-denominated loans add up to a bargain. And tha is even when
compared with local interest rates, currently more than 14% for 10-year
treasury bonds and 18% for bankers' acceptances.
Already, several large corporates have declared unrealised foreign
exchange losses on their loan portfolios as high as A$500 million.
Several banks are...
