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Volatility in the New Zealand dollar has cost exporters an estimated NZ$6.6 billion during the past two and a-half years, according to a report in the Otago Daily Times citing the New Zealand Manufacturers and Exporters Association (NZMEA).

NZMEA chief executive John Walley said since the kiwi “bottomed out” in February 2009 at US52.3c, it had risen to US72.1c, on the trade weighted index.

Recently, the kiwi was at a four-week low against the US dollar at US77.07c, down from US77.46c the day before, while against the Australian it sank to a six-month low against the Australian dollar at A75.63c, the lowest since late-May.

Walley said between February 2009 and August this year, the kiwi rose by 38% and it has averaged 13% above the February level during the last two and a-half years.

“That has come at significant cost to the exporters that earn New Zealand’s living. For every 1% the currency rises, it costs New Zealand exporters about $200 million on an annual basis,” he said.

He claimed the the Government and Reserve Bank have said it is too hard to make policy changes in this area, but a $6.6 billion impact shows “that intransigence comes at a massive cost”.

Otago Chamber of Commerce chief executive John Christie said because of the estimated export losses, there needed to be more debate on monetary policy; given either floating and pegging currencies, or targeting inflation, offered a raft of positive and negative effects.

The volatility of the kiwi was more pronounced at present and offered “less certainty” for exporters to be able to plan, and the “flip-side” meant consumers could also be adversely affected at times by dollar fluctuations on imports.

Walley said options included controlling the volume of debt, as opposed to relying on interest rates; restraining how much banks could lend, and borrowers’ capacity, and for banks to borrow more funds domestically.

More at Otago Daily Times


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