Exporters feel the pain as NZ dollar keeps rising

A strong New Zealand dollar is continuing to make life difficult for some New Zealand exporters selling their products in the United States, but a surging Australian currency is helping to offset the problem.

Murray Fenton, managing director of Adept, a Mt Eden-based plastics manufacturer, says a kiwi dollar trading above US75c renders his firm's products unprofitable when exported to the US.

The kiwi dollar was trading at US74.96c against the US dollar last night, but was above US75c during the day.

Adept manufactures and supplies plastic clips to the US meat industry, which Fenton says is very price conscious.

"If we increase our prices at all [to offset the impact of the current exchange rate] we stand to lose a large portion of the market," he said.

BNZ currency analyst Mike Jones said there was a strong chance the kiwi would go above US76.40c - which would be its highest level since the recession began - during the next few weeks.

"That's mainly because we're seeing quite marked weakness in the US dollar," he said.

Jones said the kiwi would likely remain in the US72c to US76c range against the US until early next year.

"It's not a very nice story for [New Zealand] exporters exposed to the US economy," he said. "But the big offset is that the New Zealand dollar is very low against the Australian."

The Australian dollar was steaming towards parity with the greenback yesterday, trading above US98c at one point.

Fenton said the kiwi's more favourable cross rate against a high Australian dollar was benefiting Adept's exports into that market. "Australia's lovely," he said. "We like Australia."

New Zealand Manufacturers and Exporters Association chief executive John Walley said New Zealand manufacturers buying materials in US dollars and selling into the Australian market "would have a smile on their face". The kiwi was trading at A76.55c against the Australian dollar last night.

But Walley added that many exporters were hurting from the situation with the US dollar.

The manufacturing sector would be seriously damaged if the kiwi dollar's unusually high strength against the greenback continued, he said.

The Government's response to the issue, Walley said, had so far been woeful.

"There's a sense of abandonment in that we have a Prime Minister saying, 'There's nothing we can do' - like a true currency trader."

Walley said the New Zealand Government needed to respond to the "competitive devaluations" other countries around the world were unleashing on their currencies.

That response could include quantitative easing - often described as printing money - or a lowering of the Official Cash Rate, he said.

Export New Zealand executive director Catherine Beard said there was little the Government could do to change the situation.

"I think the question back to people who advocate [a Government response to lower the kiwi dollar's value] is, 'How will you do it?"'