Falling dollar boosts exports

The tourism sector and many export manufacturers are getting a boost from a New Zealand dollar at its lowest level against the Australian currency in nearly a decade.

The dollar briefly dipped below the A77c mark yesterday as the Australian dollar gained ground on better-than-expected economic growth figures. The exchange rate was just above A77c late yesterday.

The New Zealand dollar has also been losing ground because of the Reserve Bank of Australia's decision this week to lift its benchmark interest rate to 4 per cent, making interest rates more attractive compared with New Zealand's 2.5 per cent official cash rate. About 50 per cent of New Zealand's manufacturing exports go to Australia and it is New Zealand's biggest trading partner overall.

Tourism New Zealand chief executive Kevin Bowler said the weakness of the kiwi against the aussie dollar was attractive for Australian tourists at a time when New Zealand's marketing across the Tasman was being increased.

Tourism New Zealand was expecting "pretty healthy double-digit growth" in Australian visitors this year.

While a weaker kiwi makes New Zealand cheaper for Australian tourists, it makes it more expensive for Kiwis to travel across the Tasman.

Waikato manufacturers welcomed the shift, eyeing the potential for increased sales.

NALCO Hamilton manufacturing manager Ian Bickerton said his company was exporting a small amount to regular customers in Australia, but the falling dollar meant they could look to increase their exports.

"It's definitely a benefit for us. If it stays like this for some time, we may see an increase in sales."

The aluminium company was looking to widen exports, he said.

Gallagher Group corporate services executive Margaret Comer said it was welcomed by manufacturers.

"We've been dealing with a high dollar for some time now and it does impact on our business. We do manage that process but it is obviously wonderful when it comes down, all the hard work pays off, you can increase productivity and employ more people."

Waikato's Employers and Manufacturers Association chairman Jack Ninnes said the export market should be buoyed by the easier Australian market conditions. "It's good but whether it is sustainable or not, we're not quite sure, but it is certainly a help considering Australia is one of our major export markets."

Meanwhile the kiwi has been at near quarter-century highs against the British pound but it fell to 46.28p yesterday.

- © Fairfax NZ News