Kiwi tumbles as China lowers growth target
China's recent growth target cut, the lowest seen for over eight years, has pushed down the New Zealand dollar.
China’s recent growth target cut, the lowest since 2005, has sent the New Zealand dollar on a tumble to 82.09 US cents, or 66.75 yen.
As one of New Zealand’s biggest trading partners, China has had its growth target slashed to an eight year low this year to 7.5% from 8% according to a statement made by Chinese prime minister Wen Jiabao at the National People’s Congress.
In a clear attempt to reduce capital spending and export reliance, China aims to focus on consumption within the country to make up for these priority changes.
Overnight, the New Zealand dollar has fallen to 82.09 US from a previous 82.75 US cents a day before. Perspectively, the NZ dollar fell to 66.75 yen from a previous 67.58 yen in the same corresponding time a day earlier.
China’s 8% target had previously been met and surpassed with ease over the past eight years with 2011’s growth in gross domestic product up by 9.2%, and an inflation rate of 4% to remain the same since that year.
After delivering extensive, mostly double-digit economic growth over the past three decades, China is now facing several constraints such as environmental pollution, a dwindling supply of natural resources and rising labour costs within the country.
Last year, Mr Wen had set a target of 7% for the country’s average annual growth over a five-year period from 2011 to 2015.
With the kiwi dollar currently on a decline, the importance of exports out of New Zealand remains of increasing significance.
NBR Staff
Tue, 06 Mar 2012
Tue, 06 Mar 2012
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Kiwi tumbles as China lowers growth target
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