Dollar tipped to fall

Bank’s currency survey predicts easing kiwi to fall below US80c by late next year.

Imports are going to be more expensive by this time next year if ASB Bank's latest currency survey is anything to go by.

ASB said businesses expect the New Zealand dollar to drop from US82.5c to below US80c by September 2015.

The currency has already been showing signs of weakness, reflecting softness in the price of key commodities such as dairy, and also a firmer US dollar.

The kiwi came close to hitting a new post-float high in July when it reached US88c but it has since been losing ground, which should please Reserve Bank Governor Graeme Wheeler, who has been trying to talk it lower.

Wheeler is expected to address the value of the New Zealand dollar when he releases the bank's official cash rate review and monetary policy statement tomorrow.

"Regardless of business size or type, there is a broad expectation that the NZ dollar will continue to ease and will be near 0.81 in March 2015," ASB chief economist Nick Tuffley said in the survey.

This was nearly US5c lower than the expectation from the June survey, he said.

Respondents expect the NZ dollar to be below US80c in September 2015 which was consistent with ASB's own September 2015 quarter-end forecast of US79c.

The survey period included the Reserve Bank's July OCR review, and the kiwi did drop sharply over that week, which may have influenced respondents' confidence that the currency was easing after an extended period of strength, Tuffley said.

He said ASB's own short-term view was slightly less bearish than the survey's, but he agreed that the longer-term prospects were for a weaker kiwi.

"We think the currency will sit on roughly US85c through to March next year, so that's two or three cents higher than where respondents view it," Tuffley said. "The key thing is that we do expect the US dollar to strengthen further and you are going to see some early signs of that happening by the end of next year."

ANZ Bank expects to see the kiwi at US81c by the end of this year and US75c by the end of next year. BNZ's call is a US80c kiwi by the end of this year, and US75c by September 2015.

Westpac's prognosis is for the kiwi to fall to US80c to US82c by November, then rebound to around US85c before the US dollar drives it back under US80c.

The ASB Kiwi Dollar Barometer tracks exporters' and importers' exposures to foreign exchange risk, through surveying businesses with annual turnover of at least $1 million.