By LIAM DANN and ELLEN READ
The upwards creep of the New Zealand dollar is once again causing jitters among major exporters.
The kiwi dollar hit three-month highs yesterday, briefly breaking through 66USc.
It has now appreciated nearly 10 per cent since mid-May.
Record commodity prices for beef, lamb and dairy products have overshadowed the rise and generated a steady stream of good news from the primary sector.
But Export NZ's Gilbert Ullrich says the squeeze is once again starting to go on manufacturers. Without a commodity boom to offset foreign exchange costs it was becoming a struggle for many businesses to survive, he said.
"We're having labour shortages - having to import welders from overseas - and getting no advantages at all," he said. "The manufacturing sector is taking it on the nose."
In less than a week two manufacturers - Christchurch's Electrolux and Mt Maunganui's Invensys - have laid off a total of 210 staff.
Ullrich said the volatility of the dollar was a big problem for small exporters.
"The New Zealand dollar jumps all over the place. We don't know where we're fixing it."
Ullrich said his own aluminium export business sometimes had to wait 12 months to confirm orders after providing quotes to customers.
"By the time they're confirmed we find the whole ball game has changed and we actually lose money on some orders."
Despite good prices, primary exporters are still being hit hard by the exchange rate.
The 3USc appreciation this month had cut $57 a head off bull beef payments to farmers, said Meat & Wool New Zealand's Mark Jeffries.
New Zealand Wool Services International managing director Michael Dwyer said wool prices were good by historical standards but at current levels the currency costs were starting to flow through to farmers.
While the bulk of the kiwi's rise is a response to the US dollar's weakness, the local economy is boosting the currency in its own right.
Alex Schuman, manager of foreign exchange strategy for the Commonwealth Bank, says high interest rates continue to attract investors and support the currency.
The official cash rate is 5.75 per cent but this is expected to rise to 6 per cent on July 29.
Despite the US Federal Reserve raising US rates - for the first time in four years - to 1.25 per cent, local rates remain much higher and doubts have crept into the market about the pace of US tightening.
New Zealand's dependency on Asian economies for commodity exports has buoyed the kiwi as the Chinese economy has shown few signs of slowing.
A raft of US data due this week will set the scene for future kiwi direction.
Exporters nervous over dollar
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