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

 


NZ dollar may decline in 3Q, prompting importers to hedge

NZ dollar may decline in third quarter, prompting importers to hedge ahead of Christmas

By Tina Morrison

July 10 (BusinessDesk) - The New Zealand dollar may weaken in the third quarter, prompting importers to buy the currency while it is hovering near record highs as they gear up for Christmas, their busiest season.

The kiwi, which today touched a fresh three-year high of 88.29 US cents, may slip to 85 cents by the end of September as higher local interest rates are offset by a strengthening US economy, according to the median forecast in a BusinessDesk survey of 18 currency traders and strategists.

For New Zealand retailers, a high local currency has been a benefit, enabling them to buy overseas merchandise at a lower cost which they can either pass on to consumers in the form of cheaper prices or retain to boost their margins and profits. Still, with the currency likely to decline from elevated levels, retailers such as Briscoe Group will be looking to lock in their currency rates at high levels so they have the best buying power possible heading into the busy Christmas season.

"We are a real beneficiary some days and get hurt other days by currency but certainly right now there are pretty bright sunny days at the moment with the currency where it is - it does give us some benefit but also it gives us the flexibility to sell some pretty nice merchandise at some pretty cheap prices as well," said Briscoe managing director Rod Duke, who says he has locked in options to buy the currency at favourable levels heading into the last four months of his financial year though January, where he typically makes 40 percent of annual sales.

"We certainly have a relatively high protectionist view of the currency and so I am fairly well hedged with just a small percentage left over that I can spot buy on because the most important thing for me of course is that I last longer than my competitors at these sort of levels," Duke said.

Briscoe Group, which includes the Briscoes Homewear, Rebel Sports and Living & Giving chains, has the flexibility on its balance sheet with cash in the bank and no debt to be able to buy currency to secure good rates, he said.

The New Zealand dollar is close to its post-float high of 88.40 US cents touched in August 2011 as investors are lured to the nation's higher yields as local interest rates rise while rates in most other major economies remain at record lows. The local currency is predicted to decline in the third quarter as a revival in the US turns investor attention to when interest rates will start increasing in the world's largest economy.

Expectations for the New Zealand dollar at the end of the third quarter range from 81 US cents to 91.50 cents, according to the BusinessDesk survey taken this week.

The survey shows the trade-weighted index, which tracks the New Zealand currency against those of Australia, Japan, the US, the UK and the euro area, will likely fall to 80 from 81.89 currently. Expectations in the BusinessDesk survey range from 78 to 85. That compares with the Reserve Bank's expectation for the TWI to average 79.7 over the quarter, according to its latest forecast published June 12.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news