With the S&P/ASX 200 Index (ASX: XJO) and many ASX 200 shares on the recovery today, there's undoubtedly more than a few investors who will be on the hunt for bargains. And comapnies that are in line to benefit from a low Australian dollar might be at the forefront of this search.
As anyone who has gone on or is planning an overseas trip in recent months would be painfully aware, the Australian dollar has had a rough few months. As recently as October of last year, one Australian dollar was buying close to 70 US cents.
But today, having fallen more than 10% since early October, that same Aussie dollar will buy you just 62 US cents.
There are a few possible reasons behind this dramatic slump in our national currency, one of the most obvious being the new American President's hawkish trade policy.
The reality is that this fall in our dollar has some meaningful real-world impacts on the stock market.
Now, any ASX 200 share that imports goods or services from overseas is going to feel the pain. Think Ampol Ltd (ASX: ALD), JB Hi-Fi Ltd (ASX: JBH) and Wesfarmers Ltd (ASX: WES). These companies import most, if not all, of the goods that they sell us. As such, they are probably facing higher costs to import these goods.
Falling Australian dollar: Which ASX shares benefit?
However, when there are losers, there are also usually winners in this kind of scenario. In this case, that would be ASX 200 shares that either tend to export most or all of their products to overseas markets or those who have overseas operations but bring home the profits to Australia.
The former group would now be receiving more Australian dollars for their goods, despite charging the same price in US dollars, for example. The latter group can enjoy converting the same number of US dollars into more Australian dollars than it previously could.
So, let's talk about six ASX 200 shares that might stand to benefit from our low dollar today.
In a recent report from the ABC, Julia Lee, head of client coverage at FTSE Russell, was asked to name some ofthe trends and stocks that she is looking out for in 2025. Lee named the low Australian dollar as a key trend to watch, and identified six ASX 200 shares that she thinks have the potential to benefit the most.
They are:
- QBE Insurance Group Ltd (ASX: QBE)
- Amcor plc (ASX: AMC)
- Brambles Ltd (ASX: BXB)
- CSL Ltd (ASX: CSL)
- Cochlear Ltd (ASX: COH)
- ResMed Inc (ASX: RMD)
Lee argues that all of these ASX 200 shares make "a large part of their revenue from offshore" and thus will disproportionally benefit from a lower dollar. CSL is a good example. It routinely reports its own financials in US dollar terms.
As such, expect a big boost when these US dollars are bought back to ASX investors in next week's earnings report.
It's a similar story with Cochlear, ResMed, and Amcor. So, when their next earnings reports come out, keep an eye on how much the lower Aussie dollar has benefitted these companies.
