22 Oct 2010

Economists dismiss Hobbit dollar fall theory

6:32 pm on 22 October 2010

Fluctuations in the value of the New Zealand dollar have been linked to all kinds of things, including rugby, but for the first time, a small creature with hairy feet has been blamed.

The Wall Street Journal has claimed the New Zealand dollar has been hammered by brouhaha over The Hobbit.

The newspaper says the country's small size, the hundreds of millions of dollars and thousands of jobs at stake caused the New Zealand dollar to be one of the worst performing currencies overnight on Thursday.

Currency specialists in New Zealand say the theory is highly unlikely.

The director of foreign exchange advisor Rankin Treasury, Derek Rankin, says the market is reacting to comment from US Treasury Secretary Timothy Geithner on the strength of the US dollar and to the G20 meeting to take place in South Korea this weekend.

"We've seen the Australian dollar drop overnight, we've seen the euro drop overnight, and the New Zealand dollar's just moving in line with them," he said.

ANZ chief economist Cameron Bagrie also says wider global events and the G20 meeting are were likely to be affecting the dollar, rather than The Hobbit.

He says if the film row had been having an influence, he'd have expected a bigger movement between the New Zealand and Australian dollar.

On Friday morning the currency dropped about 1 cent, but subsquently gained ground slightly and by the evening was trading at 74.80 US cents.