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New Agribusiness Currency Protection Product


WestpacTrust is the New Zealand division of Westpac Banking Corporation, which is incorporated in New South Wales, Australia


24 November 2000

WESTPACTRUST LAUNCHES NEW AGRIBUSINESS
CURRENCY PROTECTION PRODUCT

WestpacTrust has launched a new Agribusiness currency option product designed to help farmers manage the risks to their income created by currency fluctuations.

“WestpacTrust Agribusiness currency options can help smooth out the peaks and troughs in exchange rate movements and help farmers manage their cashflow risks. In doing so it protects farmers from adverse movements in the exchange rate without removing the potential benefits of favourable movements,” said WestpacTrust North Island Head of Agribusiness Dave Hutchison.

It is based on a foreign exchange ‘option contract’ that gives the holder the right, but not the obligation, to buy (or sell) one currency in exchange for another at a specified exchange rate at an agreed time.

The minimum option amount is NZD50,000 with terms from one month to two years with longer periods available on request. Options are in New Zealand dollars against US dollars and also New Zealand dollars against Australian dollars, British pounds, Japanese yen and the Euro.

“There is a premium for WestpacTrust Agribusiness currency options,” said Mr Hutchison. “The premium depends on the amount of cover, the time till the maturity of the option, the volatility in the exchange rate being hedged and the exchange rate at which the option can be used versus the current exchange rate.”

WestpacTrust Chief Economist Adrian Orr said: “Exchange rate swings can significantly alter farm profitability and most commentators are picking that the New Zealand dollar will rise against the US dollar. The question is when and by how much, as movements in exchange rates are virtually impossible to predict.”
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Information on WestpacTrust Agribusiness currency options is available from WestpacTrust Agribusiness Managers nationwide.

ENDS

For further information, please contact:

Dave Hutchison
WestpacTrust North Island Head of Agribusiness
07 834 2406
025 454 968

or

Adrian Orr
WestpacTrust Chief Economist
04 4708250

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