An empirical analysis of the relationships between exchange rate exposure and company's retail pricing policies. (3rd December 2007)

• Record Type: Journal Article
• Authors: Nasution, Ridwan; Anderson, Ray H.; Islam, Sardar M.N.
• Is Part Of: International journal of monetary economics and finance. Volume 1:Number 1(2007)
• Page Start: 32
• Page End: 44
• Publication Date: 2007-12-03
• Subjects: foreign exchange rate -- exchange rate exposure -- Australia -- retail pricing policy; Monetary policy -- Periodicals; Finance -- Periodicals; Economics -- Mathematical models -- Periodicals; 332.4
• Languages: English
• ISSNs: 1752-0479

Abstract

How do changes in the Australian dollar exchange rate affect Australian retail pricing policy? A sample of 15 retail companies from the Australian Stock Exchange found that 20% were exposed to changes against the US dollar, Euro, and Yen, and that 13?27% have significant exposure when the Trade Weighted Index is the independent variable. At industry level, only the Consumer Price Index (CPI) of the food group is exposed to changes in the exchange rate against the Euro and Yen. However, the evidence does not support a relationship between exchange rate exposure and retail pricing policy.