I have noticed that in the past 2 months, prices of electronics (especially monitors) have been on the rise.
I have also noticed that AUD/USD has risen in this period and I would have expected prices to decrease because of this.
What is the economics behind this? Why are prices rising?
Very unlikely a company will engage in CFDs as these are a speculative derivative. Futures and forward contracts on the other hand, yes.
Isn't that the same thing?
https://en.m.wikipedia.org/wiki/Contract_for_difference
Virgin and some of the airlines got burnt by having such contracts in place for fuel and then the oil price crashed bigtime.
Even farmer Joe likes to lock in a price for his crop.
Definitely not the same thing. CFDs are a completely separate financial product than futures. A futures market trades futures contracts.
CFDs are basically like buying the stock or FX itself and then hoping it moves the right way. People like to trade CFDs because you can multiply your gains (losses) with a relatively small investment. With CFDs you never know what your position is at a future date because it depends on the market price on that day.
Whereas a futures or forward contract, you lock in a price today, and at the maturity date, you will receive what was agreed in the contract (usually with futures you receive the price difference rather than the underlying asset).
Aussie dollar is only relevant to prices of electronics when they can use it as an excuse to charge more. It's like petrol prices: when oil prices rise, fuel rises immediately, but when oil prices go down, it takes ages for petrol prices to go down.
TL;DR profiteering.
Interesting, so what explains the rising prices?
I have no idea if this is correct but my guess is that retailers either buy wholesale from the manufactuer and warehouse it somewhere before it gets shipped to stores and customers or buy from a wholesaler who does the warehousing themselves.
There is also the tendency of retailers to want to constantly increase the price over the medium term as well due to them being much more ready to pass on a price raise rather than fall in usual circumstances.
Hence prices will run behind the price of the dollar currently.
It will depend on what type of technology you are looking at.
Technology that remain relatively unchanged, e.g. a basic LCD/LED monitors have become cheaper over time (plus/minus FX effects) whereas advanced technology e.g. curved monitors are causing monitors on average to be more expensive.
And also, parts of technology may have been purchased at a set point in time e.g. 3 or 6 months in advance to it actually being sold and therefore there is a delayed price effect. Just because the FX is favourable at this time does not mean you will see this reflected in prices now.
Unfavourable FX movements generally are reflected in price sooner than favourable FX movements as companies want to capitalise on the additional profits.
I think the price of monitors when the currency was $1.05 was at an all time low.
ie. 22/23 LCDs were close to $100?
Then currency fell to 70c and then LCD prices rose. Now its up to high 70s and you expect there to be a LCD price drop? LOL?
Maths, how does it work.
I think things have always been the same in the last few years… if you have low requirements then stuff is cheap as hell.
If you only need a HDMI 22" TN offbrand then you're good to go.
If you need a 24" IPS then you got to spend a bit more. I bought about 3 panels a few years back and with the amount of panels I get from council cleanup I dont think I ever need to buy another panel ever again.
I think I have 2 x 24s, 2 x 23s and a 22" + a whole heap of 19s. I dont even use a desktop much any more.
The dollar has changed but most companies will have hedged their risk against a falling Aussie dollar through CFDs in a futures market. Could be something to do with that. Everyone was saying the Aussie dollar was going down to 60 cents.