ANZ’s chief executive has warned of a “dysfunctional” foreign exchange market that is driving Australia’s businesses into “a deep hole” as they struggle to compete.
Key points:Mr O’Neill said foreign exchange markets were becoming more complex and more difficult to understandWhile foreign exchange companies in Australia have traditionally relied on a one-way transaction for international payments, Mr O’Neil said foreign entities were becoming increasingly willing to accept payments through more complex processes that were less transparent.
“This has created a situation where we are becoming more reliant on foreign exchange payments for our transactions,” he said.
“There’s a whole lot of risk in this.”
The head of the Australia’s biggest exchange said Australia was increasingly dependent on foreign payments for transactions and could be vulnerable to a loss of confidence.
The exchange’s chief economist, John Quigley, said foreign currencies had fallen by around 50 per cent in value since 2008 and were now trading at around US$20-US$30. “
So when we pay for goods or services overseas, we don’t always know what the transaction is about.”
The exchange’s chief economist, John Quigley, said foreign currencies had fallen by around 50 per cent in value since 2008 and were now trading at around US$20-US$30.
Mr Quigle said this meant foreign businesses were having to “pick and choose” what they would pay in exchange for goods and services.
“That’s why the market is so complicated,” he told the ABC’s Insiders program.
He said it was now becoming difficult for companies to maintain their international competitiveness and said it could become a drag on their ability to attract and retain international clients.
“You can get very angry and say ‘that’s not fair’ or ‘you’re taking advantage of us’,” Mr Quiglee said.
The chief executive of Australia’s largest foreign exchange company has warned there are now signs foreign entities are increasingly willing and able to accept payment through more complicated processes that are less transparent.
“John Quigles warning for Australia foreign exchange investors Mr O”Reilly said there was a lot of fear about the future of foreign exchange and foreign exchange services.
But the chief executive said it would be “very dangerous” if this continued.
“The risk is that we are going to be very vulnerable to any kind of systemic change that could put us at risk of losing confidence,” Mr Quagley said.
Australia’s largest overseas exchange company, Xero, said the company was currently working with regulators to assess whether foreign exchanges should be regulated in Australia.
Mr Quagleys warning comes as foreign companies continue to increase their presence in Australia, with the number of Australian firms in China increasing from 13 to 20 last year.
The Australian Competition and Consumer Commission (ACCC) has also raised concerns that foreign exchanges were increasingly being used to conduct business in Australia but have been largely ignored by the government.
Mr O'”Reilly said while the company would be considering any regulation, it would take a long time to review the matter and he did not want to put Australia in an unfair situation.”
We have been very cautious and have been making very careful arrangements, and we will be working with regulatory bodies to determine whether there is an appropriate regulatory framework for the foreign exchange business that we have,” he added.”
It will be very difficult for us to take any action unless there is a reasonable basis for doing so.