27 Sep 2012

Firms take steps over strong dollar

1:27 pm on 27 September 2012

Companies are increasing their foreign exchange hedging in expectation that the New Zealand dollar will rise further over the coming year, according to a new survey.

The ASB Institutional Kiwi Dollar Barometer's survey shows the overall level of hedging rose marginally to 76.4% in September compared with 75.3% in June.

Slightly higher numbers of exporters and importers covered their US dollar exposure.

The New Zealand dollar is expected to average US63 cents over the next 10 years, despite it averaging US69 cents over the past decade.

ASB expects the kiwi to average at least US70 cents, which reflects higher commodity prices and stronger Asian economies bolstering the dollar, while a weak American economy undermines the Greenback.

Businesses expect the New Zealand dollar to reach US85.6 cents by the middle of 2013 compared with the previous survey's forecast of about US81 cents, with importers expectations higher than exporters.