Primary producers and manufacturing exporters appear to be in
for a long wait before they get some relief from the rising
value of the New Zealand dollar. The kiwi hit a nine-month
high yesterday as hopes Germany would avoid recession and
optimism the US Federal Reserve would enact more easing
measures helped stocks rally and lift risk sentiment.
Across the Tasman, the Australian dollar rallied to its
highest level in almost three months on the same data and
German investor confidence helped quell fears Germany would
dip into recession, BNZ currency strategist Mike Jones said.
''We saw European equity markets rally quite strongly and
that positive sentiment spilled over into the US session and
into currencies like the Aussie dollar,'' he said.
Currency forecasts for the New Zealand dollar, released
yesterday by Craigs Investment Partners, showed a wide range
of values from major banks.
The December 2012 forecasts for the NZD/USD cross were
relatively even at between US81c and US83c. But the December
2013 forecasts ranged from a low of US79c to a high of US84c
to give an average of US81c.
The average forecast for December 2014 fell to US75c and the
following year the dollar was forecast to trade at US69c.
However, against the Australian currency the NZ dollar is
predicted to rise from an average A79c to A80c from 2013 to
2015 inclusive. Australia remains New Zealand's largest
Craigs broker Chris Timms said the range of forecasts showed
how difficult it was to predict where currencies would trade.
''You can give a forecast but it doesn't take much to change
things. One unforeseen event and it all goes out the
There was not much anyone could do in New Zealand to push
down the value of the dollar, as most of the movements were
controlled by offshore events, he said.
Risk was back on the table and investors were more
comfortable investing in New Zealand. The country was seen as
having a stable political environment and being a producer of
However, if the United States Congress failed to agree to
measures to address the looming ''fiscal cliff'', it was
likely the kiwi would fall as US investors took their money
home, Mr Timms said.
''If they bumble through the cliff, Australia continues to
cut its official cash rate and global interest rates remain
at all-time lows, you can expect our dollar to remain high.
I'm not sure that even if our Reserve Bank cut its OCR that
our dollar would fall, such is the appetite right now for
The rise and fall of the kiwi almost exactly matched the
movements in the Dow Jones Industrial Index, he said. When
the Dow was up, so was the value of the kiwi and when the Dow
fell, so did the kiwi. It was all related to risk in the
market, Mr Timms said. Asked who bought the dollar, keeping
it high, he said overseas investors wanting to buy shares in
New Zealand's listed companies needed to settle in the local
currency. They bought the dollar, often pushing the value up
beyond where many believed it should be.
The ''fiscal cliff'' relates to about $US600 billion ($NZ716
billion) of tax increases and spending cuts that will
automatically come in on January 1 unless Congress can agree
on a solution. US President Barack Obama is pushing for
higher tax on those earning more than $US250,000 and the
Republicans want lower tax for the high-income earners, but
the closing of tax loopholes coupled with budget spending