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New Zealand Dollar - “On Road To Nowhere?”

The overnight slump in the New Zealand dollar to 44.3c against the US$ points to an economy whose international reputation is rapidly diminishing to dangerous levels.

The Kiwi dollar began the week just above 45 US cents but by this morning had tracked down to a level not seen since 1985 when the “open market” policies of Rogernomics were introduced.

Commenting, Michael Barnett, Chief Executive of the Auckland Regional Chamber of Commerce, said that it is hard to escape the conclusion that international investors have lost confidence in New Zealand. “Are we starting to pay the price for unwinding some of the key stabilisation policies introduced in the 1980s?”

The NZ Dollar looks to be on a road to nowhere, and points to an economy that international investors and commentators believe is performing poorly and getting worse, he warned.

There is a risk of complacency - a feeling that “we can sit back and live with a low dollar because it brings higher prices for our commodity exports.”

“But we can’t rely on higher returns from a limited range of commodities continuing indefinitely.” If New Zealand is to build a diverse economy and lift living standards to levels similar to those of other successful countries, a strategy will be required to attract new investment into New Zealand.

The overnight slump is yet another warning of how vulnerable we are to international trends and the pressures continuing to build on our skilled workforce and businesses to take themselves to a better performing and more sympathetic business environment offshore.

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