Rises in the New Zealand dollar have cost exporters approximately $6.6 billion over two and a half years according to the New Zealand Manufacturers and Exporters Association (NZMEA).
In February 2009 the NZ Dollar bottomed out at 52.3 on the Trade Weighted Index (TWI), but since then currency manipulation overseas and inaction in New Zealand have seen the NZ Dollar TWI rise to 72.1 in August.
NZMEA Chief Executive John Walley says, “For every one percent the currency rises it costs New Zealand exporters approximately $200 million on an annual basis. Between February 2009 and August this year the NZ Dollar rose by 38 percent and it has averaged 13 percent above the February level over the last two and a half years. That has come at significant cost to the exporters that earn New Zealand’s living.
“We have seen the impact with exporters such as Rakon announcing the negative impact of currency volatility – and these are the larger companies with an international footprint who are able to hedge more effectively to mitigate exchange rate problems – what chance do smaller players have?”
“We have heard from the Government and the Reserve Bank that it is too hard to make policy changes in this area, but a $6.6 billion impact shows that intransigence comes at a massive cost. To put a scale on this, the sale of Air New Zealand and the energy State Owned Enterprises is projected to raise $7 billion as a one off.
“For a Government that claims to champion the tradable economy it is unfathomable that they would standby and see the export sector taxed to death by a high currency.
“There is no easy fix to an overvalued currency, but there are options available and they must be considered if New Zealand is to earn its way out of debt.”