Orica Ltd., the world’s largest maker of industrial explosives, said Australia should manage its currency “as other countries have” to support industries being hurt by the Aussie’s record run above U.S. dollar parity.
The local currency climbed 50 percent since the end of 2008 as investors are lured by Australia’s AAA rating and the highest interest rates among developed nations. Unconventional monetary policies in the U.S. and Japan have raised concern their currencies will be debased while Switzerland has capped gains in the franc since 2011 to help exporters and fend off deflation.
“It is very hard with our manufacturing base as a company to think of a profile where the Aussie dollar stays above parity with the U.S. for another five or ten years,” Orica Chief Executive Officer Ian Smith told a Melbourne Mining Club lunch today. The government should “make sure that we manage our currency to some degree as other countries have done.”
The Australian dollar traded at $1.0517 as of 3:59 p.m. in Sydney and yesterday reached $1.0552, the most since Jan. 24. The Reserve Bank of Australia’s trade-weighted index rose 0.4 to 79.90 yesterday, the most since February 1985.
Benchmark rates in Australia are 3 percent compared with near zero in the U.S. and Japan. The South Pacific nation is one of eight that hold stable AAA grades from all three main credit-rating companies and its 10-year sovereign bond yields are 1.78 percentage points more than the average for the other seven.
Orica’s net income fell 37 percent to A$402.8 million ($424 million) in the year ended Sept. 30, the company said in November, after booking a charge of A$367 million at its Minova mining support business. The unit makes specialty stabilization and ventilation systems for underground mining and civil tunneling works and operates in countries including Australia, the U.K., Germany, India, South Africa, Poland, Russia, and the U.S.