Currency markets are choppier in 2026 - and businesses are feeling it

Haydn Calderwood
11:00am February 10 2026

The Australian dollar has always been sensitive to global forces, but in recent times we’ve seen sharper and more frequent movements.

2026 has started with a flurry for currency markets. For thousands of Australian businesses, currency volatility is no longer a background issue.

 

It is a commercial reality that directly affects margins, cash flow and strategic decision-making, says Richard Franulovich, Westpac’s Head of FX Strategy.

 

“The Australian dollar was relatively steady and subdued in the second half of 2025, holding mostly to a 0.64-0.67 range.

 

“But things couldn’t be any different in the first weeks of the new year, with the Australian dollar sprinting rapidly higher, from around 0.67 to above 0.70 in a matter of days,” he says.  

 

The Australian dollar has always been sensitive to global forces, but in recent times we’ve seen sharper and more frequent movements driven by interest rate divergence, geopolitical uncertainty, commodity price swings and shifting global capital flows.

 

For businesses with international exposure, these movements can quickly turn otherwise sound commercial decisions into financial headaches.

 

Currency volatility is a real business risk

Many businesses underestimate how deeply foreign exchange (FX) movements affect their bottom line.

 

Even relatively small shifts in exchange rates can materially impact profitability when margins are tight.

 

Currency volatility influences:

  • The cost of imported goods and materials
  • The competitiveness of exports
  • Cash flow timing and certainty
  • Pricing decisions and contract risk.

 

Currency risk shows up directly in your margins and cash flow.

 

Without a well-managed approach, businesses can find themselves reacting after the damage is done.

 

The tools that can help

 

Westpac customers using Online Banking have tools at their fingertips that can keep them abreast of currency movement, and that let them make the decision about whether to lock in an exchange rate for a future purchase or let it move along with the market.

 

Westpac’s Head of Digital FX, Kim Merlo, explains: “Business owners have told us that whilst exchange rates are important to them, they don’t always have time to keep an eye on them.

 

“They find the Foreign Exchange Rate Alert function in Online Banking a great help - this notifies them when the currency hits their specified levels, so whatever they are doing in their business, they know where their FX rate is.”

 

Merlo notes that online banking also works for customers who want to lock their rate in for payments to be made up to a month in the future.

 

“When businesses have an invoice to pay in foreign currency, our new Fixed FX* capability lets them schedule the payment and decide whether they want to fix the exchange rate now or let it fluctuate until the payment date.

 

“This puts control back in the hands of our customers,” she says.

 

For larger clients with more complex cashflows, better results often come from partnering with a FX specialist.

 

Many businesses rely on internal finance teams or external accountants for guidance on FX hedging strategy - whilst these specialists have an intimate understanding of the businesses they work with, there is no substitute for dedicated financial markets expertise.

 

Volatility can work both ways and can also present opportunity, says Damian Underwood, Westpac’s Head of FX Structuring.

 

“Our clients want to protect their cashflows, but they also want the confidence to make decisions when markets are unsettled. 

 

“In uncertain FX markets, a clear plan and some flexibility alongside day-to-day hedging really helps,” he says.

 

Volatility is here to stay - but it can be managed

 

Currency volatility is an enduring feature of global trade.

 

For internationally active Australian businesses across importing, exporting, agribusiness, construction, retail and technology, ignoring FX risk can quietly erode performance.

 

Using the tools available or engaging financial markets experts allows businesses to take control and make decisions to protect margins and plan with confidence.

 

The most resilient businesses will not be those that attempt to guess exchange rates correctly, but those that manage currency risk deliberately and proactively - reducing uncertainty and protecting commercial outcomes.

 

For more information or to speak with a Westpac FX dealer, please visit our website or call 1800 221 815.

 

*Fixed FX is a Financial Product. You should obtain a copy of the Product Disclosure Statement (PDF 392KB) and consider whether it is appropriate for your objectives, financial situation and needs. The Fixed FX Target Market Determination is available here.

 

Westpac has not considered your objectives, financial situation or needs in preparing this advice. Any information you may have previously provided to Westpac has not been taken into account. Before acting on any advice please consider the appropriateness of the advice for you, having regard to your objectives, financial situation and needs and, if necessary, seek appropriate professional advice. The information in this article and any opinions, conclusions or recommendations are reasonably held or made, based on the information available at the time of its publication but no representation or warranty, either expressed or implied, is made or provided as to the accuracy, reliability or completeness of any statement made in this article.  Past performance is not a reliable indicator of future performance.

Haydn Calderwood

Haydn Calderwood is Managing Director, Business and Consumer Financial Markets at Westpac. He leads the distribution of FX and Interest Rate solutions to Business and Consumer clients across Australia and New Zealand.

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