By BRIAN FALLOW
WELLINGTON - The New Zealand dollar, which had struggled back above US46c on Tuesday, took another tumble yesterday after April trade figures showed no sign of a turnaround.
The figures showed a slowing in import growth at least when oil (which is volatile) and aircraft (a lumpy item) are excluded.
But preliminary estimates show a slowdown in export growth too.
The April trade balance was a deficit of $86 million, where the financial markets had expected a surplus of the same order.
It pushed the annual deficit to a new low of $3.5 billion.
An Auckland foreign exchange dealer said that given the prevailing negative sentiment towards the dollar it was easier for the currency to move lower than to move higher, so it was liable to drop in the wake of data like yesterday's disappointing trade numbers.
The dollar fell from US45.77c just before the figures were released to 45.25c two hours later, and was still trading around that level late yesterday.
Deutsche Bank senior economist Darren Gibbs said that Statistics New Zealand's initial export estimates for February and March had been revised up by $32 million and $59 million respectively, so yesterday's preliminary figure for April ($2.3 billion) might be revised upwards too.
But taking the figure at face value, exports in the three months ended April were up 16.8 per cent on the same period last year, easing back from 17.8 per cent for the three months ended March.
By contrast, imports in the three months to April were up 20.6 per cent on the same period last year, after being 14 per cent up in the three months to March compared to the same period the previous year.
April imports were swollen by $218 million worth of aircraft and parts, compared with $19 million last April, while crude oil imports at $216 million were three times last April's, reflecting higher prices and a weaker dollar.
Motor vehicle imports were $228 million, the third-highest ever. WestpacTrust economist Michael Jansen said the on-going strength of import demand for cars was baffling given the chronic over-supply in the industry and the weak New Zealand dollar measured both against the yen and the US dollar.
With retail sales of cars appearing to slow, imports were bound to follow suit, he said.
HSBC economist Stefan Dunatov said the trade cycle tended to peak around this time of the year. "Although we anticipate two positive results from the visible balance over May and June the typical deterioration through the winter months is unavoidable. In respect of the annual balance, current projections point to the deficit remaining in the $3 billion to $3.5 billion band until November when the export season begins to kick in again," Mr Dunatov said.
Imports of consumer goods were up 7.7 per cent on April last year, or were flat when allowance is made for the 7 per cent fall in the exchange rate over the year.
But imports of plant and machinery were 1 per cent lower.
Mr Jansen said even without the transport items (oil, cars and planes), imports were still growing reasonably strongly, suggesting domestic demand remains quite robust in the June quarter.
Trade figures undermine dollar
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