The value of the $US dollar matters to New Zealand because a lot of our exports are traded in that currency and every cent it goes up means lower returns for our produce.
Recent rises in the exchange rate haven’t been because our dollar has become more popular, they’re more because the $US has fallen.
The graph tracks the changes in the value of the $US against the currencies of five key dairy trading nations from 2002 until the end of May:
From April 1 to May 29 the $US fell 12% against the Brazilian real (purple line); 11% against the $AUs (red line) 10% against the $NZ (blue line) 5% against the euro (green line) and 1% against the Argentinean peso (pink line).
Our dollar fell three cents against the $US yesterday reflecting both a rally in that currency and concern about the 12% fall in the price Fonterra got in its latest globalDariyTrade auction.
UPDATE: Matt Nolan and Paul McBeth have corrected me: the increase in the value of the $NZ is due to both the fall in the $US and popularity of the $NZ.