NZ Herald business editor at large

What's the right value for the NZ dollar?

The New Zealand dollar has been falling as the US economy returns to normal. Photo/file
The New Zealand dollar has been falling as the US economy returns to normal. Photo/file

The kiwi is finally falling as investors move their focus back to the US economy. That's good news for exporters but bad news for consumers who have become comfortable with the high dollar making everything cheaper - from books and clothes to overseas travel

So where are we hoping the dollar will settle? Surely no one wants to see it hit lows of US38c, which it touched at the start of the millennium. Petrol above $3 a litre anyone?

But there seems to be agreement, from the Reserve Bank down, that anything over US80c is bad news for our export focused economy.

For the past few years, the kiwi and aussie dollars have been hot currencies for international investors. We have been among the only stable economies in the world that haven't resorted to printing money. Our interest rates, the yield the investors can get on a local currency, have been relatively much higher than in the US and Europe.

Markets are starting to anticipate an end to the stimulus in the US. They might be ahead of the gun and it may be some time yet before the US Federal Reserve changes policy.

But we are starting to get a taste of what is in store for us when America returns to more normal policy settings.

A lower dollar will mean better returns for local exporters and hopefully should flow through to job creation and wages. But, from a consumer point of view, the coming shift might not be so much fun.

Tell us what you think. What is the ideal value for the kiwi dollar?

- NZ Herald

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NZ Herald business editor at large

Liam Dann is business editor at large at the New Zealand Herald. He has been a journalist for 20 years, covering business for the last 14 of them. He has also worked in the banking sector in London and travelled extensively. His passion is for Markets and Economics, because they are the engine of the New Zealand economy. He hosts The Economy Hub video show every Thursday.

Read more by Liam Dann

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