5 May 2010

Euro turmoil affecting NZ exporters

10:36 pm on 5 May 2010

Exporters in New Zealand are beginning to feel the fallout from the European debt crisis as the euro takes a battering on foreign currency markets.

On Wednesday the New Zealand dollar reached a new two-and-a-half year high of over 55 cents against the currency shared by 16 European countries.

As a result, European companies are having to pay more to buy exports from New Zealand.

Countries using the euro account for four of New Zealand's top 20 export markets.

The managing director of wool exporter Segard Masurel, Peter Whiteman, says his customers are struggling to pay.

"We've seen it years ago with the processing capacity moving from Europe in the merino and fine wool sector for apparel and knitwear move to China.

"We're starting to see that now really gaining some momentum in the carpet sector too that is moving to Asia. The weak euro is only going to move that capacity there faster."

The $1 billion kiwifruit industry relies on Europe for half of its sales.

The chief financial officer of exporter Zespri, Merv Dallas, says last season's fruit is only now being sold in Europe and the weaker euro will take a heavier toll as currency hedging is used up.

Currency strategist Derek Rankin believes there is more pain for exporters to come. He has revised his forecasts and now has the New Zealand dollar peaking at 60c against the euro.