Fall in dollar is exporters' gain

KAT PICKFORD
Last updated 11:26 16/07/2013
Tony Alexander
Fairfax NZ
BNZ chief economist Tony Alexander

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Marlborough exporters are getting some sweet relief from the slight easing of the New Zealand dollar.

However, they are out of luck if they hoped the kiwi would continue to fall, with economists predicting the currency will remain strong over the next 12 months.

Last month, the kiwi dropped below US80 cents for the first time in a year. It has not been below US70c since June 2010.

BNZ Bank Blenheim senior partner Domenic Romano said BNZ expected the New Zealand dollar to hover between US77.5c and US82 cents for the next 12 months.

Marlborough Forest Industry Association president Michael Cambridge, who was visiting Shanghai in China last week, said the dollar drop was welcome relief for exporters.

"It's certainly better than what it was a few months ago," he said.

"We're getting reasonably good prices. The demand for radiata in particular is very good, and has increased considerably compared with other suppliers."

Previously, Russia dominated the Chinese timber market, but the Chinese appeared to find New Zealanders much easier to deal with and New Zealand timber more desirable, he said.

New Zealand Winegrowers advocacy and trade general manager Dr John Barker said although the dollar had fallen slightly, it was still strong against some major training partners, and was continuing to squeeze exporters' profit margins.

"We're not happy with the high exchange rate, but we've been able to adjust to it," he said.

"Historically it's been the fluctuations that makes it difficult to plan pricing, particularly when it's going up rapidly."

Despite its high rate, the kiwi had at least been reasonably consistent in recent months, and the strong Australian dollar had enabled exporters to hedge against the weak pound and US dollar.

Aquaculture New Zealand chief executive Gary Hooper said easing of the kiwi, particularly against the greenback, would benefit Marlborough's aquaculture exporters.

"International demand continues to increase for our greenshell mussels and king salmon," Mr Hooper said. "Market prices are strong and the softer New Zealand dollar will boost returns for the region and the country."

In his weekly overview last week, BNZ economist Tony Alexander said New Zealand's strong commodity prices, stable government accounts and accelerating growth pointed to a stable New Zealand dollar.

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- The Marlborough Express

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