Kiwi climbing against Aussie mixed news

Last updated 05:00 26/01/2014

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The once-unlikely prospect of our humble dollar being worth just as much as its Australian counterpart may mean happy days for Kiwi holidaymakers, but pain for our exporters and the tourism industry.

Economists say it's unlikely that the kiwi will quite match the Australian dollar but when markets closed on Friday the exchange rate was at its highest point in 35 years - a stunning A94.9c.

The shift is a result of the Australian dollar's steep decline against the US dollar, a move partly attributed to an Australian economy weakened by the Chinese paying lower prices for natural resources such as coal and iron ore.

The upshot for New Zealanders is that exporters and tourist operators may find it harder, but Kiwis may be encouraged to holiday more often across the ditch.

Sunday Star-Times business columnist Rod Oram said that because the Australian dollar had dipped against all currencies, all imports to Australia would be more expensive.

ANZ chief economist Cameron Bagrie said that exporters had tended to focus on the kiwi's performance against the greenback, and people had forgotten the "crutch" that was a more favourable rate against the Aussie dollar. "That crutch has been ripped out from underneath us in the last 12 months," he said.

Bagrie said that "generally speaking, where the Aussie dollar goes, the kiwi will follow" and it would take a major event - such as a most-unlikely economic crash across the Tasman - for our dollar to leapfrog Australia's.

Oram said the winners would be importers and holidaymakers planning trips to Australia.

But the travel market here could be hit: Australia represents our biggest inbound tourism market, and traditionally New Zealand represented value for money. A recent minor trend of Australian manufacturing investment here could also be affected.

Oram said any slowdown in the Australian economy affected ours, but other factors, such as the Christchurch rebuild, had helped our economy stay strong.

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- Sunday Star Times

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