By ELLEN READ and AGENCIES
Prospects of a New Zealand dollar again valued above 70USc are worrying exporters.
With higher local interest rates imminent, revived US dollar weakness and a continuing recovery of commodity-linked currencies, the NZ dollar is soon expected to go above 70USc.
The currency has risen through 69.50USc to its highest level since February as the US dollar remains under pressure amid tepid prospects for the US economy, widening deficits and election nerves.
Locally, the long Labour Weekend may hasten the kiwi's rise as it will reduce liquidity, making volatile spikes more likely.
"With offshore demand what it is, expect a test of the topside and a break of 69.60USc," an ANZ commentary said yesterday.
ASB Bank's weekly report says the NZ dollar will probably head higher, the result partly of market reaction to Thursday's expected interest rate rise.
"We believe the risks are weighted towards the [RBNZ commentary] being more hawkish than is expected by the market," the ASB said.
Since the kiwi was floated in 1985, its high against the greenback has been 72.70USc, reached in June 1988.
While strong commodity prices (paid in US dollars) have helped to protect exporters to some extent from the strong currency, present levels cut their profits.
And those exporters looking to other markets to compensate will find little comfort across the Tasman. The kiwi is hovering around 94Ac and tipped to rise.
Australia is New Zealand's largest export market and the destination of many first-time exporters, so such strength against the aussie can hurt prospects.
Citigroup economist Annette Beacher said although the cross had pulled back from the 94.91Ac high posted last month, it was still a long way above the 10-year average of 85.40Ac.
Exporters wary of dollar going over 70USc
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