Business expects long-term fall in kiwi to near US60 cents
ASB survey finds businesses expect the New Zealand dollar to peak at 85.6 cents in the middle of next year.
BUSINESSDESK: Kiwi businesses expect the New Zealand dollar to run up as high as 85 US cents over the next few months, but to drop and average 63.2 cents over the next decade, ASB's kiwi dollar barometer shows.
Importers' expectations are higher, at 64.9 cents, while exporters' expectations were lower, at 60.4 cents.
However, ASB economists only partially agree, predicting a much higher long‐term average for the NZD/USD over the next 10 years at about 70 cents.
"A key driver behind our expectation of a structurally higher New Zealand dollar is the ongoing strength in export commodity prices on the back of strong long‐term economic growth in Asia," the bank says.
"Continued strength in dairy prices is expected to hold the New Zealand dollar structurally higher. Meanwhile, broader economic fundamentals are likely to keep the US dollar itself weaker relative to pre‐GFC levels."
"Recent history suggests businesses should be prepared for the NZD/USD to be firm over the long term, unless the commodity boom ends," it says.
The NZD/US cross has averaged at about 69 cents over the past decade and 71 cents since dairy prices began a sustained lift in 2004.
The New Zealand dollar recently traded at 81.94 US cents and has been above 80 cents in the last 15 months.
ASB's survey found New Zealand businesses expect the kiwi to peak at 85.6 cents in the middle of next year. That is higher among importers who are predicting the kiwi will reach 87.4 US cents by March 2013 before easing to 85 cents in September.
Exporters see the potential for some easing in the near term averaging at 79.7 cents at the end of this year, before peaking at 85.4 cents in June 2013.
ASB expects the kiwi to remain elevated over the coming year, trading at about 82 US cents in September 2013.
Hannah Lynch
Wed, 11 Jul 2018
Wed, 11 Jul 2018
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Business expects long-term fall in kiwi to near US60 cents
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