12 Mar 2014

Exporters expect NZ dollar to fall

10:25 am on 12 March 2014

Interest from exporters in hedging against the very strong New Zealand - US dollar exchange rate has fallen away because they're expecting the currency to drop soon.

A survey of businesses with annual turnover of at least $1 million, conducted on behalf of ASB Bank, found exporters on average expect the New Zealand dollar will fall to US78.2 cents by this time next year. At present the New Zealand dollar is trading at US84.67 cents.

The survey also found nearly 70 percent of businesses expect the New Zealand dollar to reach parity with the Australian dollar over the coming year.

ASB chief economist Nick Tuffley said while exporters predict the New Zealand dollar will fall steadily over the year, importers see the dollar remaining in the low to mid 80s against the US currency for much of the year and declining only gradually.

Mr Tuffley expects the New Zealand dollar to ease back below US80 cents. "In the short term, though, we're likely to find the New Zealand dollar pretty firm, particularly as the Reserve Bank starts lifting interest rates." But longer term, he said, the US dollar itself is likely to strengthen and the high exchange rate will ease back.