Kiwi dollar set to stage comeback
(12 June 2012 – New Zealand) New Zealand businesses expect the kiwi dollar to ease further against the US dollar before staging a recovery early next year, the inaugural ASB Institutional Kiwi Dollar Barometer has shown.
After some easing in coming months, survey respondents’ expectations for the NZD/USD at the end of December 2012 is 77.1 cents, with a recovery to 80 cents expected by March 2013.
'The extent to which the NZD lifts will depend on how successful Europe is in containing the ongoing debt crisis, which has pulled the NZD down recently,' said ASB chief economist Nick Tuffley.
Businesses reported a tendency to manage their foreign exchange exposure in response to recent movements and volatility in the NZD, with a distinct majority of businesses viewing their hedging activities as being successful, according to the Barometer, which was commissioned by ASB Institutional and conducted by business banking research and advisory firm East & Partners.
Larger businesses reported a higher success rate in hedging their foreign exchange risk. This is likely reflecting the better resources large businesses tend to have for managing their foreign exchange exposure and suggests there is potential for SMEs to benefit from increasing their hedging capabilities.
The ASB Institutional Kiwi Dollar Barometer also revealed that the high NZD has seen importers increase their investment plans, but exporters decrease their investment plans, this reflects the fact a high NZD tends to increase the competitiveness of imports domestically while decreasing the global competitiveness of exports.
The ASB Institutional Kiwi Dollar Barometer will be prepared every three months based on a survey conducted by East & Partners. For the June edition of the ASB Institutional Kiwi Dollar Barometer, East & Partners interviewed over 350 businesses turning over at least NZ$1 million per year.
'The extent to which the NZD lifts will depend on how successful Europe is in containing the ongoing debt crisis, which has pulled the NZD down recently,' said ASB chief economist Nick Tuffley.
Businesses reported a tendency to manage their foreign exchange exposure in response to recent movements and volatility in the NZD, with a distinct majority of businesses viewing their hedging activities as being successful, according to the Barometer, which was commissioned by ASB Institutional and conducted by business banking research and advisory firm East & Partners.
Larger businesses reported a higher success rate in hedging their foreign exchange risk. This is likely reflecting the better resources large businesses tend to have for managing their foreign exchange exposure and suggests there is potential for SMEs to benefit from increasing their hedging capabilities.
The ASB Institutional Kiwi Dollar Barometer also revealed that the high NZD has seen importers increase their investment plans, but exporters decrease their investment plans, this reflects the fact a high NZD tends to increase the competitiveness of imports domestically while decreasing the global competitiveness of exports.
The ASB Institutional Kiwi Dollar Barometer will be prepared every three months based on a survey conducted by East & Partners. For the June edition of the ASB Institutional Kiwi Dollar Barometer, East & Partners interviewed over 350 businesses turning over at least NZ$1 million per year.
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