Falling New Zealand dollar great news for Kiwi exporters

Kiwi exporters benefit from sharp drop in New Zealand dollar.
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Kiwi exporters benefit from sharp drop in New Zealand dollar.

New Zealand exporters have had a stellar year thanks to the falling kiwi dollar, resulting in more cash in hand.

The New Zealand dollar fell from above US78c in January to a low of US62.70c in September. It ended the year about US68c, below where it began.     

Export NZ executive director Catherine Beard said it had been a really positive year for exporters, who are remaining positive despite the slight increase to 68c.

"Basically, it gives them more margin and therefore more profitability – it also gives them confidence.

"They have really been battling for quite some time and then this year the pressure came off quite significantly. But because they have been battling for quite some time, I think they were in a really good position to take advantage of the lower exchange rate."

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Exporters would have "screwed down every bit of productivity that they could", Beard said.

"So, essentially, they are extremely efficient otherwise they would have gone out of business." 

Most exporting sectors had a great year, with manufacturing and food and beverage exports the clear winners. However, a couple of sectors were "challenged", she said.

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"There were categories that were challenged, such as dairy, where they had low commodity prices"

Westpac senior market strategist Imre Speizer said economists noticed a "short, sharp rise" in dairy prices as a result of the Kiwi dollar rising in the last four months.

"The last third of the year was a rebound, which caught a lot of people by surprise – including us – and that was caused mainly by a sharp rebound in dairy prices.

"That rebound in itself has stalled but it was quite a sharp rebound and was partly caused by fears of a drought, which people thought would see dairy prices pick up again."

Accelerating the decline to the year's low were a couple of things that were unique to New Zealand, and one of those was the fall of dairy prices, he said.

"In addition to that we had the Reserve Bank of New Zealand cutting interest rates, which was pre-empted quite a while ago.

"So I'd say number one factor was the US dollar and two secondary factors being dairy and interest rates, which basically caused the Kiwi to go the same way."

- This story has been corrected to show the decline from US78c was from January, not in August

 - Stuff

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