1:45 AM
The dollar continued its slide against the US dollar this afternoon hitting a new all-time low of 42.35 US cents before recovering slightly to US 42.80 cents at 5.00 pm.
The drop in the value of the currency is expected to be reflected in higher prices.
However, the Government will not be intervening to prop up the sliding dollar.
Finance Minister Michael Cullen says there are a variety of reasons for the slump including long-standing structural issues leading to a large current account deficit.
NZ will have to ride out the storm, he says, as small countries which try to get involved by direct intervention in foreign exchange markets run the risk of taking a bath.
Dr Cullen says the market is reflecting the dollar being oversold and undervalued.
An Australian economist says the slide in the value of our dollar will not be reversed until the New Zealand economy shows signs of increased growth.
Chief Economist of HSBC in Sydney Grant Fitzner says our dollar is being hurt by a strong US currency, plus concerns about the lack of growth in our economy.
Oil companies are today reassessing prices in the wake of a double hit. Along with the drop in the New Zealand dollar, international crude oil prices surged upwards.
BP says more petrol price increases will be the only answer, if the dollar doesn't rally.
The company says every cent the dollar falls adds one and a half cents to each litre of fuel.
The Warehouse says its bargain bins will not suffer immediately, due to forward buying.
However, it concedes its ability to absorb increasing costs has been squeezed almost dry by a four year dollar slide.
The Australian dollar is also suffering, shedding two US cents in yesterday's trading.
It was trading at 56.45 US cents last night, close to its lowest level so far this year.
- IRN
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