Bernard Hickey: Buy now, pay later it's the NZ way

The high kiwi dollar means it's a good time to go on holiday or be an importer. Photo / supplied

It was the best of times, it was the worst of times. The NZ dollar jumped to post-float highs this week against the British pound and the Japanese yen. It also rose to a three-and-a-half year high against the Australian dollar.

On a trade-weighted basis, the kiwi flew to within a smidgen of its July 24, 2007, high.

It's a wonderful time to be an importer. This strong NZ dollar means it costs a lot less, in NZ dollars, to buy a car, a flat-screen television or an iPad. It's a fantastic time to go on holiday. It means you can travel for longer, stay in fancier hotels and buy more souvenirs to clog up the closet.

It's also a time for consumers to be cautious, and just a little bit ruthless. One big risk in times like this is that importers and retailers keep their prices at the same levels as when the NZ dollar was lower. That means the wholesaler, importer and/or retailer essentially pocket the price reduction on the way through.

That's why consumers need to be especially vigilant and demanding. They should know where the product was imported from and how much the NZ dollar has risen in recent months. Remember that most importers and wholesalers will order items months in advance. If there has been a big rise in the currency in the meantime, some will not benefit because they paid in advance or hedged. Others will be able to sell at the same NZ dollar price, but pay much less in the base currency of the imported good.

Some will genuinely be able to say they had already paid for the item at the depressed rate months ago and are not pocketing the difference. Whatever the case, with just-in-time inventory systems and air freight advances, that delay is rapidly telescoping down to not much. Certainly ask the retailer when they actually paid the wholesale price.

If in doubt simply demand a price cut, using the currency's rise as your ammunition. For your information, in the past six months the NZ dollar has risen 6 per cent against the US dollar (which also means for Chinese imports, given the greenback is the main currency used in trade with China), has risen 9.2 per cent against the pound, is flat against the euro and is up a stonking 25 per cent against the yen.

That means push the hardest on Japanese-made items, especially used imported cars.

This currency strength is of course painful for exporters and those who compete with imports. It is costing thousands of jobs. However, consumers who follow the signals sent by the currency will buy imports rather than locally made items, or outsource production or services.

The high currency is great in the short term for consumers, just as long as they have a job and income - or a very good line of credit.

Buy now and pay later - it's the kiwi dollar way.