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

 


English says NZ dollar 'unsustainably high'

English says NZ dollar 'unsustainably high', out of line with commodity prices

By Tina Morrison

July 23 (BusinessDesk) - Finance Minister Bill English said the New Zealand dollar, which hit a record on a trade-weighted basis this year, is "unsustainably high".

"I share the same view as pretty well anyone who looks at the New Zealand currency and says it's unsustainably high," English told BusinessDesk on the sidelines of a Trans-Tasman Business Circle lunch in Wellington. "Almost anyone who has looked at it comes to the conclusion it's somewhere 10 to 15 percent overvalued."

The New Zealand dollar has been hovering near its post-float high of 88.40 US cents before weakening last week on slower inflation figures and a fall in dairy prices. The kiwi has gained about 6 percent so far this year, recently trading at 86.74 US cents, as a revival in the local economy pushes up interest rates.

Reserve Bank governor Graeme Wheeler is expected to hike the rate tomorrow for the fourth time this year, taking the benchmark to 3.5 percent and increasing the lure of the currency at a time when other major economies have their rates at record lows.

English said the currency appeared to be "out of line" with commodity prices. "I just observe that historical correlation, and it looks a bit high."

Still, he said New Zealand exporters had developed resilience because of the high currency.

"New Zealand is actually in reasonably good shape," English said. "We have had an export sector running at an 85 cent dollar now for five or six years and that has generated an enormous amount of shaking out in pretty much any business you can think of. It's a strong headwind for them and it is pushing more of them to do more."

"I've been pleased to see how many of the companies though are just getting on with that, rather than sitting there paralysed with something they can't change," he said.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Wood Producers: Crisis In New Zealand Log Supply

New Zealand wood processing leaders held a hui with senior government officials and political leaders in Whangarei yesterday to assess the acute log supply shortage to local mills in Northland. More>>

Consents And Taxes: Trustpower 'Very Disappointed' With Judgement

Trustpower is "very disappointed" with a Supreme Court ruling dismissing its bid to claim tax deductions on $17.7 million of project costs in a case closely watched by large-scale infrastructure developers. More>>

ALSO:

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news