Bad Aussie jobs data drives up NZ dollar
Exporters can expect little relief from New Zealand's soaring dollar, after it hit an eight-year high against the Australian currency.
The kiwi touched A94.52 cents yesterday, from its previous high of A93.96c set earlier in the day. It closed at A94.46c but has not traded at these levels since 2005.
OM Financial senior foreign exchange adviser Stuart Ive said the jump came on the back of weaker than expected Australian employment growth.
The market expected Australia's economy to add 10,000 jobs last month but instead the number of people in work fell by 22,600, while the unemployment rate was steady at 5.8 per cent.
Australian employment figures were always volatile, Ive said. While New Zealand's economy continued to flourish, Australia was not showing any signs of improving, he said. The kiwi could remain at these levels with the next main resistance point being A95.82c.
Next week's consumers price index was likely to move markets and would give an indication of what to expect from the New Zealand Reserve Bank's monetary policy statement later this month, he said.
The New Zealand dollar could trade between A93.90c and A95.30c in the next 24 hours but it was unlikely to go past A94.70c, Ive said.
Exporters should not be shocked by the kiwi's further surge against the aussie, he said.
Currency experts had been warning exporters of the possibility of a stronger New Zealand dollar since last year.
Windsor engineering chief executive Peter McKee said that while some kiwi exporters would have forward cover to protect against the rising exchange rate, some would see the jump in the exchange rate as a surprise.
"Rapid little jumps" caused more problems to exporters than long-term currency trends that they could plan around, McKee said. Exporters needed to focus on long-term trends rather than get hung up on "little blips".
Businesses should decide whether the New Zealand dollar had peaked against the aussie or whether it was still on the ascent and plan accordingly.
Export NZ executive director Catherine Beard said exporters were acknowledging the high New Zealand dollar was a continuing issue and were introducing strategies to deal with it.
They were focusing on growth and productivity so they would remain competitive when the Australian economy took off again. Australia was an important market to New Zealand in terms of the number of exporters that relied on it.
ANZ senior foreign exchange manager Sam Tuck said the big debate now was how long the kiwi could stay at these levels.
There was a precedent from the mid-2000s for the kiwi to trade in this elevated range for the short to medium term. "The timing question looms very very large," he said.