Rakon calls for stability in foreign exchange market
Technology exporter Rakon yesterday called for something to be done about the volatility of the New Zealand dollar.
"Overseas traders profit from playing with our currency and they do so partly because as a nation we borrow so much offshore for non-export product assets, such as investment in housing," chairman Bryan Mogridge said at the annual meeting.
In the past year the New Zealand dollar had moved from US80c to US50c to US68c.
This made it difficult for exporters to make sound decisions.
"There has to be a way we can selfishly bring some stability to this see-saw. I have no instant pudding answer but I do know that what we are currently doing isn't working and we need to urgently re-examine our goals and find new New Zealand focused solutions."
Most Popular
NZ Market Snapshot
NBR Services
.jpg)
Latest
- Canterbury economy bleak after quake but light ahead
- S&P signals possible cut of Christchurch's rating
- Union and Burgerfuel reach employment consensus
- Corporate NZ steps up for Canterbury quake
- Allied Farmers receives funds, seeks to reassure trustee
- Pike River to launch second shipment
- Fonterra boosts mayoral relief fund with $1m
- Listed companies detail impact of earthquake
- NZOG to buy back shares
- Fletcher Building pledges $1 million to help quake recovery
.jpg)
.jpg)
Comments
Fluctuating Currency
The price of monetary independance.
We could throw out the $kiwi and pick up the $kanga
In actuality the Aus currency has also fluctuated widely against the USD, but so have all currencies that are not pegged to the USD.
currency stability
The Reserve Bank of New Zealand can sell NZ dollar.
FX is killing export economy
I am the founder and the CEO of a software company focusing on original research and licensing our technology and software to the large software companies around the world. Our company derives 100% of our revenue from export, and our cost base is predominantly the salaries of our 10's of highly skilled software engineers in NZ. In other words, we are one of those companies that are creating skill jobs in NZ and helping to balance the NZ trade deficit.
When the FX went to US$0.82 in 2008, we were close to having to reducing headcount despite having a great business growing >100% y/y. Looking at how the FX has traded over the last year, it is very obvious the NZ$ is detached from the fundamentals of the NZ economy and instead wedded to the international hot money market.
This is absolutely not healthy for the export sector, and if New Zealand government does pay lip services to the export sector, we need to find a way to make NZ$ less interesting to the money market speculators.
The obvious solution is to reduce the NZ interest rate to be in line with the major economies and NZ economic fundamentals, and make it an explicit policy clearly communicated to the money market speculators and carry trade. However this is something the current Reserve Bank and government appear to be unwilling to do; the reason being brandied about is the risk of inflating another property bubble. However there are plenty of tools that the government (but not the Reserve Bank) could wield to discourage a property bubble; progressive capital gain taxes and stamp duties on secondary properties, stricter application of accounting/taxations rules for property speculators and other mechanisms do work. If the government has the will power to battle against vested interests, Mr. John Key can certainly make first home more affordable to kiwis, discourage property bubbles and enjoy a more healthy export sector.
What is there to lose (aside from the vested interests)?
FX is killing export economy
I am the founder and the CEO of a software company focusing on original research and licensing our technology and software to the large software companies around the world. Our company derives 100% of our revenue from export, and our cost base is predominantly the salaries of our 10's of highly skilled software engineers in NZ. In other words, we are one of those companies that are creating skill jobs in NZ and helping to balance the NZ trade deficit.
When the FX went to US$0.82 in 2008, we were close to having to reducing headcount despite having a great business growing >100% y/y. Looking at how the FX has traded over the last year, it is very obvious the NZ$ is detached from the fundamentals of the NZ economy and instead wedded to the international hot money market.
This is absolutely not healthy for the export sector, and if New Zealand government does pay lip services to the export sector, we need to find a way to make NZ$ less interesting to the money market speculators.
The obvious solution is to reduce the NZ interest rate to be in line with the major economies and NZ economic fundamentals, and make it an explicit policy clearly communicated to the money market speculators and carry trade. However this is something the current Reserve Bank and government appear to be unwilling to do; the reason being brandied about is the risk of inflating another property bubble. However there are plenty of tools that the government (but not the Reserve Bank) could wield to discourage a property bubble; progressive capital gain taxes and stamp duties on secondary properties, stricter application of accounting/taxations rules for property speculators and other mechanisms do work. If the government has the will power to battle against vested interests, Mr. John Key can certainly make first home more affordable to kiwis, discourage property bubbles and enjoy a more healthy export sector.
What is there to lose (aside from the vested interests)?
Post new comment