KEY POINTS:
The average period of hedging for New Zealand importers is 8.3 months, according to a survey on foreign exchange hedging.
The quarterly survey was done by Nielsen on behalf of Asia-Pacific Risk Management and the New Zealand Export Credit Office.
It found that in July, importers' foreign exchange contracts covered on average 8.3 months of forecast foreign currency purchases, compared with 9.2 months last quarter.
Asia-Pacific spokesman Roger Kerr said that given the evidence the economy was in recession and the higher prospect of big interest rate cuts in the next year, it was "a little surprising that importers are not increasing their hedging percentages".
However, the New Zealand dollar has not as yet fallen much against the US dollar, and it was possible importers were waiting for more certainty that the US dollar would strengthen.
Some forecasters were expecting higher prices for imported goods if the kiwi dollar fell, Kerr added.
"The 8.3 months of hedging already in place would suggest that such price increases will be delayed and perhaps muted, also given the weak domestic consumer spending demand."
Exporters on average are hedging a much shorter time horizon of 5.7 months, from 6.5 months earlier.
Kerr said the survey would be invaluable to the Reserve Bank in formulating the impact of currency movements on the future inflation rate.
- NZPA
