Dollar's next big move down, says BNZ

Tuesday 23 March 2004

The kiwi dollar's next big move will be down, but it may take some time for that to happen, say Bank of New Zealand economists.

By The Landlord

In their latest Economic Monitor, they recommend that exporters consider reducing their hedging and that importers think seriously about increasing theirs.

Over the past month the New Zealand dollar has dropped about 8 per cent against the United States dollar.

"We would attribute about three-quarters of this shift to strength in the US dollar, which over the same period has risen 2.4 per cent against the yen and 4.7 per cent against the euro," the BNZ economists say.

Although those moves are smaller than the kiwi's, less liquid currencies tend to move more when a turnaround comes.

In that regard, the Australia dollar's 7 per cent fall against the greenback is instructive, the BNZ economists say.

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