Exporters and manufacturers face a double currency hammer
blow from the strong New Zealand dollar weighing in against
its counterpart Australian and United States dollars.
Following the New Year boost to the respective strength of
the New Zealand and Australian dollars, they are now trading
flatly against the world's major currencies as the United
States addresses its looming debt ceiling crisis.
The New Zealand dollar tumbled, as investors chose safer
investments amid signs of a weakening global economy and
concerns over European banks' exposure to euro zone debt.
The New Zealand sharemarket continued its big moves of recent
days in early trading, wiping out much of yesterday's gains,
after more sharp declines on world exchanges.
The New Zealand sharemarket roared higher in early trading,
following the lead of Wall Street where stocks surged into
the close after the Federal Reserve pledged two more years of
near-zero interest rates.
The New Zealand dollar has briefly touched a one-year high
against its Australian counterpart and weakened against the
euro, with investors growing increasingly risk averse as poor
economic data keeps coming in the United States.
Getting government spending under control and having a lower
official cash rate were key to getting the value of the New
Zealand dollar back to a sustainable level, Act New Zealand
leader Don Brash said yesterday.
The strong New Zealand dollar
might be helping to keep a lid on inflation but it is costing
export returns, Federated Farmers national president Bruce
Wills has warned.
The rise of Asia and extensive problems in many western
economies are predicted to keep the New Zealand dollar
stronger for the next few decades than it was in the 20 years
after being floated.
