Title: An empirical analysis of the relationships between exchange rate exposure and company's retail pricing policies

Authors: Ridwan Nasution, Ray H. Anderson, Sardar M.N. Islam

Addresses: Victoria University, P.O. Box 14428, Melbourne City, Victoria 3001, Australia. ' Victoria University, P.O. Box 14428, Melbourne City, Victoria 3001, Australia. ' Victoria University, P.O. Box 14428, Melbourne City, Victoria 3001, Australia

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.

Keywords: foreign exchange rate; exchange rate exposure; Australia; retail pricing policy.

DOI: 10.1504/IJMEF.2007.016024

International Journal of Monetary Economics and Finance, 2007 Vol.1 No.1, pp.32 - 44

Published online: 02 Dec 2007 *

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