Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Kiwi dollar 'significant headwind' for economy, Wheeler says

Kiwi dollar 'significant headwind' for economy, RBNZ's Wheeler says

By Paul McBeth

Dec. 6 (BusinessDesk) - The persistent strength of the New Zealand dollar has been a "significant headwind" to the economy as it erodes export earnings and encourages local consumers to buy foreign-made goods, according to Reserve Bank governor Graeme Wheeler.

The Reserve Bank has raised its forecasts for the currency over the coming two years, as international money markets chase yields in a low interest rate environment and as major central banks around the world - including the US Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan - print money in a last-ditch bid to stoke economic growth.

"The high New Zealand dollar continues to be a significant headwind, restricting export earnings and encouraging demands for imports," Wheeler said in Wellington.

The bank sees the kiwi dollar holding above 73 on a trade-weighted basis until December 2013, and falling to 71.40 in early 2015.It previously saw the TWI falling below 72 next year, sliding to 68.6 by March 2015.

The kiwi dollar climbed to 82.76 US cents after this morning’s monetary policy statement, from 82.49 cents immediately before. The trade-weighted index rose to 73.86 from 73.62.

The central bank said the strength in the kiwi dollar has discouraged foreigners from visiting New Zealand by eroding their spending power and has added to the woes in the local manufacturing sector by reducing their price competitiveness.

At the same time, it has encouraged locals to "obtain greater quantities of imported goods and services without spending more of the incomes on imports," leaving New Zealand producers out in the cold.

Still, the currency's strength hasn't been all bad, with the bank saying it has contained tradeable inflation and aided some exporters into Australia who have purchased their goods elsewhere.

"The strong New Zealand dollar has also meant that interest rates are lower than would otherwise be the case," the bank said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news