High dollar not all bad

The relatively high value of our dollar makes our exports more expensive but Trans Tasman points out it’s not all bad:

. . . The exchange rate is proving a tough obstacle for many exporters, yet the historically high prices for dairy commodities are a key catalyst for NZ’s improving terms of trade. The strong NZD is also keeping a brake on import costs.

ANZ Bank economists say the $64,000 question will be the extent to which the high NZD impacts on the RBNZ’s deliberations. Concerns regarding the currency are one of the motivating factors behind the RBNZ’s decision to broaden its tool-kit. The recent easing in mortgage approvals suggests the high LVR lending speed limits and subsequent lift in fixed mortgage interest rates for such lending are having an impact on borrowing, and hence the residential property market. But the elevated NZD is providing the RBNZ with more breathing space. It could potentially delay rate hikes.

Opposition parties keeping criticising the government for not doing “something” about the value of the dollar.

That their ideas of “something” wouldn’t work and would threaten the independence of the reserve bank doesn’t get in the way of their rhetoric.

They also conveniently overlook the upside of the higher dollar – imports are cheaper.

This doesn’t just apply just to electronic gadgets and trinkets, it also affects essentials like fuel, machinery, some food and medical supplies.

Another benefit of the higher dollar is that it helps keep interest rates down.

Does the Opposition want to explain to the poor people they purport to represent why they want the cost of living and interest rates to increase?

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