Increase against greenback bad news for exporters

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The New Zealand dollar's big rise against the US dollar since March is a headache for exporters, because it reduces the value of their offshore earnings, but it should help on the inputs side by making imports cheaper.

But Tim Wilkes, chief executive of New Zealand's biggest tractor importer, Palmerston North-based CB Norwood, said he expected only a subdued impact on the inputs side.

Most of New Zealand's tractors come from Europe, and are paid for in euros. While the New Zealand dollar has also firmed against the euro, its gain has not been as big as its jump against the greenback.

"It [the strong NZ/USD rate] certainly helps in terms of the pricing on large combine harvesters and high horsepower tractor product from the US, but about 70 per cent of new tractors are sourced out of Europe, in the medium horsepower range," he said.

"In terms of exports and farming, we do well if the farmers are doing well, and when the currency is moving up into that sort of realm, it certainly puts pressure on the upside of commodity prices," Wilkes said.

A jump in the kiwi dollar today does not translate into a cheaper tractor price tomorrow, he said, as there is typically a six- or seven-month lead time for ordering tractors and other farm machinery.

As far as the average consumer goes, the strong currency has put downward pressure on imported goods, such as electronic items, John Journee, chief executive of Noel Leeming said.

"It is hard to determine because most of our purchases are done through the branded companies and they have their own forward cover framework, so how exactly it flows through is less obvious," Journee said.

But he said the price of televisions had come down by about 10 to 15 per cent in the last year, and by 15 to 20 per cent in the year before that.