30 Dec 2015

New Zealand dollar to slide in 2016 - analysts

6:00 am on 30 December 2015

The New Zealand dollar is expected to slide in the coming year, according to a range of analysts cited by international news agency Bloomberg.

300114. Photo Diego Opatowski / RNZ. dOLLAR DOWN

Photo: RNZ

They forecast the Kiwi to fall, alongside a dip in the value of the Australian dollar, against the US dollar.

That fall was put at 10 percent.

A slip in the New Zealand dollar would help exporters but make imported goods more expensive.

The Kiwi has already fallen from almost 90 US cents two years ago, to 68 cents now.

Bloomberg's experts based their comments on the possibility of further cuts in base interest rates in both New Zealand and Australia.

This conflicts slightly but not conclusively with the position of the Reserve Bank.

It cut the Official Cash Rate earlier this month, adding it did not expect to have to cut the rate again, but could if it had to.

"Monetary policy needs to be accommodative to help ensure that future average inflation settles near the middle of the target range," it wrote.

"We expect to achieve this at current interest rate settings, although the Bank will reduce rates if circumstances warrant. We will continue to watch closely the emerging flow of economic data."

However, the Reserve Bank of Australia was slightly stronger on the possibility of a rate cut.

"Members observed that the outlook for inflation may afford scope for further easing of (monetary) policy, should that be appropriate to lend support to demand," it wrote.

If this led to rate cuts in Australia, the Aussie dollar would probably fall further and that would affect the New Zealand dollar, which traditionally hovered alongside its more powerful neighbour.