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Exporters hit by low sterling

New Zealand companies exporting to Britain and being paid in sterling are being hurt by that currency dropping to a 30-year low against the kiwi dollar.The fluctuation means their sales deliver lower returns in New Zealand dollar terms.When the NZ dollar

NZPA
Tue, 30 Mar 2010

New Zealand companies exporting to Britain and being paid in sterling are being hurt by that currency dropping to a 30-year low against the kiwi dollar.

The fluctuation means their sales deliver lower returns in New Zealand dollar terms.

When the NZ dollar was floated 25 years ago this month, it was worth 45.50 pence. At the weekend it reached 47.80p, its highest level against sterling in three decades, compared to its long-term average of 39p. In June 1979 the kiwi was valued -- pre-float -- at 50.54p.

Wine Institute chief executive Philip Gregan told NZPA the high level of the pound was making things "very challenging" for New Zealand wine exporters into the UK.

"It's still our second-most important market," he said.

New Zealand sent $285 million worth of wine to Britain last year, 28 percent of exports by value and about a third by volume.

Some wineries were looking at diverting product to other markets.

"It's certainly causing exporters to think about alternative markets or putting an emphasis on growth in some other markets -- the United States or Asia".

The problems have been exacerbated by a world grape glut and slower spending in many developed countries in the wake of the global financial crisis.

The exchange rate for the British pound is also crucial in the meat sector, where Britain is New Zealand's biggest export market for lamb, though a world shortage of traded sheepmeat has offset some of the effects.

Demand for NZ lamb has risen in Britain, as farmers there send their own product to Europe to cash in on the low exchange rate for the pound against the euro.

NZPA
Tue, 30 Mar 2010
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Exporters hit by low sterling
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