Paul O'Brien's costs are rising and it's not just supply chain issues, shipping delays and increasing inflation that we're all becoming accustomed to that is the cause.
The US dollar is soaring, which means most currencies, including ours, are falling against it.
Mr O'Brien's now paying a lot more for a transaction that cost him $100,000 in April.
"In the last three months, we've seen changes of around about $12,000 to $13,000 difference between transactions," Mr O'Brien told ABC's The Business.
His company, AirPhysio, makes a device that helps people with conditions like asthma, bronchiectasis and cystic fibrosis, to clear mucus in their lungs and improve their breathing.
In the midst of a pandemic caused by the respiratory disease COVID-19, business has been booming.
"We had massive growth over the last two years, of around 2,300 per cent in 12 months, and about 5,000 per cent over the last two years," he said.
The vast majority of the parts in the handheld device are made in Australia, except small, medical-grade ball bearings that Mr O'Brien imports from China.
That trade is done in US dollars, so it's now costing him a lot more to buy them.
"The difference [in the USD/AUD exchange rate] went from around about 74, 75 cents in the dollar, down to a couple of days ago, we [saw] about 63, 64 cents.
"You're talking about $20,000 to $23,000 difference in a payment that might happen each week or every month."
"It's been a case of all systems go for the US dollar," said Westpac's head of a foreign exchange strategy, Richard Franulovich.
"The US dollar has been strong across the board this year and the Aussie dollar has not been immune, it's down about 11 per cent."
The Freight and Trade Alliance warns the high US dollar could have ramifications for local consumers too.
"When the Aussie dollar falls against the US dollar, imports become significantly more expensive for importers and, by extension, businesses and consumers," Sal Milici from the Alliance told The Business.
"Our members in the importing community have had a really rough three years — they've had COVID-related supply chain crises, that flows into sky high shipping rates, and also our biosecurity agency is quite chronically challenged.
"And now, while there's a little bit of a respite on the freight front, that's sort have been evaporated by this fall in the currency."
Aussie dollar is higher against other currencies
Some of our other trading partners are having a much rougher time of it than Australia. They are seeing their currencies fall while ours is stronger against them.
"Other currencies have fared a lot worse [than Australia]. The Yen is down more than 20 per cent. The pound is down about 17 per cent," Mr Franulovich said.
Commodity prices for our biggest exports — such as iron ore, coal and gas — are still elevated, and that's what's giving our currency strength in the global market.
The UK is on the buying end of those higher commodity prices, with Europe in the grips of an energy crisis.
Already struggling in poor economic conditions, the British pound went into freefall last week after the UK government announced tax cuts for higher earners that were to be funded by borrowings.
That extra stimulus in the economy would have counteracted the Bank of England's measures to try to slow the rate of inflation.
"Markets there were questioning the fiscal credibility of the UK authorities and that sent the pound reeling and interest rates soaring there last week," Mr Franulovich explained.
"Now the Bank of England has intervened and provided a bit of a backstop. [It has] agreed to buy UK gilts [bonds] in whatever amounts necessary to stabilise the UK bond market and the interest rate markets there."
This week, Prime Minister Liz Truss has also backtracked on the tax cuts.
It wasn't the best timing for Australian business Locako to launch into the UK.
The Sydney-based business makes high-protein snacks and drink powders.
"We've been waiting to launch into the UK for a really long time now," founder and chief executive officer Ally Mellor said, after returning from the UK on Friday.
"What was really important was waiting for the market to be ready and the market to sort of understand the products that we're bringing in."
The company will sell its products in 500 stores across the UK and Europe.
While the consumer market might now been ready for the products, money markets didn't deliver the best results for Ms Mellor's business, launching into an economy with a currency at its lowest rate in history.
"The pound has definitely hurt us," she said.
"We signed on with a distributor about three months ago and we set our pricing for the entire year. So, with the currency the way that it is, it's hurt the cost that they're buying it from us for.
"So we're making less, which is not something that we imagined."
However, Ms Mellor is playing the long game and hopes the UK currency will turn in the favour of Australian businesses exporting to that market.
"We're hoping the pound becomes stronger and we can gain that back at the end of the year," Ms Mellor said.
It's a different story for exports in USD
AirPhysio makes its devices at Tweed Heads and ships them to 100 countries globally, with most of that trade also done in US dollars.
Selling in US dollars means Mr O'Brien's company is reaping the benefit of the higher exchange rate too.
"We actually do see the benefit of the dropping dollar because that means more AUD through the sales than US dollars," he explained.
Mr Franulovich said Australian businesses such as Mr O'Brien's are getting a double benefit.
"Australian exporters are enjoying relatively robust prices for their exports, they're earning US dollars for those exports, at the same time as the Aussie dollar has fallen.
"They're translating those US dollar revenues and bringing it back into Australia at a lower exchange rates, so they are getting a double dividend there."
Travellers — except to the US — are smiling
Khurram Hashmi is packing his bags as he prepares to return to his country of birth, Pakistan, for a long-overdue visit to see his family.
"I lost my dad two and a half years ago in the peak of COVID and I wasn't able to go and, so, this is the earliest time I could get to go and pay my respects and offer the last prayers after his death," Mr Hashmi said.
"It's a family visit, but then, naturally, going back to Pakistan is going back to the heritage which I come from, so I'm definitely looking forward to it."
Mr Hashmi regularly sends money to his mother in Pakistan and has noticed the exchange rate has been moving in his favour.
"Over the last almost 12 months, what I've seen is a huge difference with the Australian dollar appreciating in value in comparison to Pakistani rupee, for sure," he noted.
"I remember when I went [to Pakistan] last time, it was one Aussie dollar to 100 Pakistani rupees, now it's close to 140 or 150 [Pakistani rupees].
"So, for sure, I'm expecting it to travel further and I'll spend less."
A strong USD is here to stay, for now
It's no secret the Reserve Bank of Australia (RBA) has been hiking the interest rate to try to slow down the rate of inflation in Australia.
But it's also in a tug of war to keep in step with other central banks, so Australia does not get left behind.
Here's looking at Japan, which has a negative interest rate and, as such, a much wider gap between it and the US Federal Reserves' funds rate of between 3 and 3.25 per cent. Its fall against the US dollar has been twice as much as Australia's this year.
When the RBA announced its smaller-than-widely-expected interest rate hike yesterday, the Australian dollar immediately dropped against the US dollar.
"The general feeling was that the RBA would be hiking rates again, by 50 basis points, and that's what the market was bracing for," Mr Franulovich said.
"But they didn't. They cut by a much smaller increment, and the immediate reaction was for the Aussie dollar to fall by a good 1 per cent," he added.
With the US Federal Reserve widely expected to hike by at least another full 1 per cent before the year is out, the gap between their rate and the RBA's, will widen.
"That leaves the Aussie dollar very vulnerable from an interest rate differential perspective," Mr Franulovich explained.
"The bottom line is that, if the RBA is not going to be keeping pace with rate hikes compared to the likes of the Fed or other central banks, the interest rate differential will be moving against the currency in ways that are problematic for the Aussie [dollar]."
BetaShares chief economist David Bassanese said that, after the RBA meeting yesterday, the interest rate differential will keep upward pressure on imported inflation.
However, he noted, recent declines in the Australian dollar against the greenback have been much less on a trade-weighted basis.
He added that: "Much of the Australian dollar's weakness against the US reflected broad-based US dollar strength globally."
Mr Bassanese noted that, when comparing the Australian dollar on a trade-weighted basis, the decline in our currency was as small as 5 per cent.
Mr Franulovich thinks that, once the US Fed starts to slow its hiking cycle, the Australian dollar will be in a stronger position.
"We do think [that], by early next year, the Federal Reserve will have gotten close to the point where they've got rates in fairly restrictive territory.
"That will take a lot of upward pressure off the US dollar and that spells a better environment for the Aussie dollar.
"But we're not there yet."
