Tourism operators and firms exporting into Japan say they're having to turn to new strategies to cope with the weak Japanese yen, a process that appears to be paying off for now.
The New Zealand dollar is currently trading at 78 yen and looks set to break through the key 80 yen barrier - a level that hasn't been seen since before the global financial crisis.
That's largely due to Japan's bid to reinvigorate its export-driven economy by weakening the currency but the relatively sound fundamentals of the New Zealand economy have added to the kiwi's momentum.
In the last three months of 2012 the New Zealand currency gained 11.1 per cent against its Japanese counterpart, which in turn has impacted on Kiwi exports into the world's third biggest economy.
Figures from Statistics New Zealand show the value of exports to Japan fell by 17.3 per cent to $698 million over the same period.
But digging below the headline numbers reveals some surprising findings.
The number of Japanese tourists visiting New Zealand rose 4.5 per cent last year and they spent an average of $4100 while here, about $900 higher than in the previous period.
Martin Snedden, head of the Tourism Industry Association of New Zealand, said the gain was explained by operators realising they had no control over the currency and instead looked for alternative ways to target our fifth biggest tourism market.
Air New Zealand and Tourism New Zealand, the internationally-focused tourism-marketing agency, have been running campaigns in Japan to attract visitors, and the airline has, over the past few years, been adding more direct links to the country.
"They have taken the view there is a whole new generation of Japanese visitors who are much younger, who don't have that experience of New Zealand, and who are interested and prepared to come," Snedden said.
Likewise, reports from the manufactured goods side of the export market suggest firms are looking for avenues around the high cross rate - which is increasingly being described as "the new normal".
Mike Daniell, head of breathing mask and respirator manufacturer Fisher & Paykel Healthcare, said Japan was an extremely important market for the firm, with its elderly population profile and high level of healthcare spending. Fisher & Paykel has been coping with the high kiwi by moving manufacturing to low-cost countries like Mexico, as well as by launching new products on the market which typically fetch higher prices.
The firm also employs an aggressive hedging strategy, having sunk $600m into forward currency cover during the depths of the global financial crisis which is blunting the impact of the high exchange rate, and will continue to do so for another two years.
Exporters of primary goods are feeling the currency pinch a little deeper though. Turners & Growers head Geoff Hipkins said his firm was coping with the higher kiwi by using forward cover and by absorbing the impact of currency gains on its balance sheet rather than pass them on to end customers, a strategy that was working for now.
"We are almost becoming immune to living in a high exchange rate environment but you can only hold your breath for so long," he said.
BNZ economists estimate the momentum behind the kiwi-yen cross will fade over the coming year, and peak at 82.50 yen by the end of the year before consolidating. Mike Jones, a currency strategist at the bank, believes the potential upside of the weak yen is that it could revitalise the Japanese economy, giving consumers greater power to purchase New Zealand goods.
"To a certain extent you measure the strength of the economy by growth and not the currency that governs it," he said.