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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


Trade: NZ Trade Deficit Widens To A Record In September

Oct. 27 (BusinessDesk) - New Zealand's monthly trade deficit widened to a record in September as meat exports dropped to their lowest level in more than three years. More>>


Animal Welfare: Cruel Practices Condemned By DairyNZ Chief

DairyNZ chief executive Tim Mackle says cruel and illegal practices are not in any way condoned or accepted by the industry as part of dairy farming.

Tim says the video released today by Farmwatch shows some footage of transport companies and their workers, as well as some unacceptable behaviour by farmers of dragging calves. More>>


Postnatal Depression: 'The Thief That Steals Motherhood' - Alison McCulloch

Post-natal depression is a sly and cruel illness, described by one expert as ‘the thief that steals motherhood’, it creeps up on its victims, hiding behind the stress and exhaustion of being a new parent, catching many women unaware and unprepared. More>>


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


International Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news