1. Interest Rates and Foreign Exchange
A general update and what we can offer our clients
Interest Rates
and
Foreign Exchange
March 2017

2. Markets: What We Do
Markets: Interest Rates, Foreign Exchange, Commodities
Approach: Risk Management
Definition of Risk Management: the evaluation of financial risks together with the identification of procedures to avoid or minimise their impact
How: we offer a suite of risk management solutions that
Provide protection against the direct impact of adverse market movements
Facilitate participation in favourable market movements
Tailor your facility to match your business requirements and risk profile

3. Interest Rates: Recap Of 2016 and Looking Forward
The cash rate hit an all-time historic low of 1.50%, and has traded sideways since
Fixed rates also reached all-time historic lows, but have trended higher
What will 2017 and Beyond Bring?
NAB sees one more cash rate cut but CBA, ANZ and WBC all say no more cash rate cuts at all. Market pricing also says no more cash rate cuts
NAB believes the more than three decade long decline in fixed rates likely ended in 2016

4. The Cash Rate: What the Market is Currently Pricing

5. Longer Term Movements
Despite the recent moves higher in fixed rates, there’s still considerable value in a historical context.

6. NAB Business Markets Loan
NAB’s main lending product
Is a loan with market-linked pricing and embedded interest rate risk management options
Once a loan limit and approved term is in place, this loan allows a combination of components:
Floating rate
Fixed rate(s)
Cap rate(s)
Any combination of the above three all in the one loan
Monthly, quarterly or half-yearly interest cycles to suit your cash flow, interest paid in arrears

7. Foreign Exchange: Recap Of 2016 and Looking Forward
AUD/USD ranged from to
It spent most of the time within a and range
What will and Beyond Bring?
2017 so far has seen AUD/USD range from to
Currently trading at
NAB sees AUD/USD steadily move lower to by March 2018
Main assumption behind the view is US Fed to raise interest rates, 3 hikes forecasted for 2017
Main risk to this is continued commodity strength

8. NAB Foreign Exchange Personalised service with dedicated FX dealer
Wholesale exchange rates
Market watch orders
FX hedging tools to ensure you receive the AUD you expect when converting your foreign currency income back to AUD:
Forward Exchange Contracts
Currency Options
Any combination the above products to suit your specific business needs and goals
Online FX dealing via NAB Connect
Quantifying the Risk
= AUD1,396,648
= AUD1,291,822
Difference of AUD104,826

9. What Are The Benefits Cash flow certainty
Reduced reliance on speculation around economic events or forecasts
Allows focus on core business, not interest rate, currency or commodity price movements
Reduces the incidence of surprises in company results

10. For Further Queries or Questions
Claudia Campbell
Associate Director | Foreign Exchange and Interest Rate Risk Management
Business and Corporate Markets | National Australia Bank
Level 7, 100 Creek Street, Brisbane QLD 4000
Mob: