Businesses expect no relief from New Zealand's buoyant dollar next year, betting that the kiwi will peak at US86.2 cents in six months.
The ASB's institutional kiwi dollar barometer, a quarterly survey which tracks foreign currency exposure among import and export firms with an annual turnover of at least $1 million, shows this expectation. The survey found both importers and exporters expect the kiwi to climb.
Importers were the more bullish of the two - forecasting the kiwi would rise to US86.6c by mid- 2013. Exporters, on average, expect the kiwi to peak at US85.8c.
ASB economist Christina Leung said the average of US86.2c was about on par with where the bank expected the kiwi would be next June - a level reached in August 2011.
The upward move, if it pans out,would be a boon for importers, whose bottom lines have benefited from lower costs of foreign goods as they have increased margins or lowered prices on goods, such as flat-screen televisions and fuel.
The flipside is that the already fragile export sector - broadsided in the last year by the kiwi's strength - would be under more pressure, and likely cause further job losses among manufacturers.
Importers and exporters alike attribute the rise to the perceived safe-haven appeal of the kiwi and widening interest rate differentials.
Leung said the official cash rate, which is now at a historically low 2.5 per cent, was appealing to overseas bondholders, who were finding interest rates of close to zero in many developed markets. She expects the margin of difference between rates to hold steady next year.
"While we're wary about the boost the [Canterbury] rebuild could bring to the economy, as well as a stronger housing market, the fact the recovery is gradual and the inflation environment is still pretty contained suggests there's little chance of a hike." However, she expressed surprise that 44 per cent of respondents saw the kiwi gaining due to its safe haven appeal - a role typically occupied by the highly liquid US dollar and Japanese yen.
The kiwi and its Australian counterpart are regarded as commodity or growth-linked currencies, whose movements are often magnified by their limited supply, making them ill-suited to act as a reserve.
- The Dominion Post