26 Sep 2014

Wool exporters want lower dollar

2:40 pm on 26 September 2014

Wool traders, like all exporters, would like to see the dollar come down further after yesterday's dip against the US currency.

Sixty to 70 percent of New Zealand's wool exports are sold in US dollars, so a lower exchange rate increases the returns coming back to exporters and farmers in local currency.

The latest dollar fall had no impact on yesterday's South Island wool sale because it happened after the auction took place.

However, New Zealand Wool Services International General Manage John Dawson said the sale was still strong, with prices for all wool types lifting again.

Mr Dawson said exporters would look forward to any easing of the exchange rate.

"In fact all the price indicators were up again, which reflects strong buying by China, and those wools that they've purchased, they want shipped within a pretty short time frame, so you saw the pressure of that at yesterday's auction."

"If that demand continues and you have the lower currency as well, it can only help prices and I suspect that that's exactly what will happen.

"So when you have a genuine demand coincide with a currency shift like this, certainly the price in New Zealand cents will go up.

"What we don't like is too much volatility. I wouldn't like the currency to depreciate too much, too quickly, because it just causes uncertainly in the market place and it can be a negative factor, but if it's reasonable orderly, that helps us a lot."

Mr Dawson said ideally, wool exporters would like to see the New Zealand dollar valued at the low-to-mid 70 US cents.

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