17 Dec 2014

Current account deficit reaches 6-year high

4:37 pm on 17 December 2014

New Zealand's current account deficit widened to a near six-year high in the September quarter, but was lower than economists had been expecting.

The deficit of $25 billion was up $490 million from the June quarter's shortfall. The deficit was the result of falling dairy prices and rising imports.

The annual deficit rose to $6.1 billion or 2.6 percent of the economy - up from 2.5 percent in June but below the 2.8 percent economists were expecting.

Meanwhile, the Reserve Bank said its new measure of the New Zealand dollar, which comes into effect today, does not materially alter its view that the exchange rate is unjustifiable and unsustainable at current levels.

The Reserve Bank has more than tripled the number of currencies it now uses to measure the value of New Zealand dollar, from five to 17.

The new TWI 17 includes China and the currencies of many other of New Zealand's Asian trading partners.

However, the Kiwi has barely budged against China's renminbi, since the Reserve Bank first intervened to bring the New Zealand dollar down about three months ago.

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