High NZ dollar causes exporters to revisit investment plans

1.00pm

The strong New Zealand dollar has caused a significant number of exporters to revisit their plans for future investment and, in some cases, cut back staffing levels, a survey has found.

The DHL Export Barometer has found that the kiwi, which has this week tested eight month highs about the US70c mark, has affected exporters.

Sixty-three per cent of the 314 exporters surveyed said they had been negatively affected by the kiwi's recent rise.

About a third had cut back on plans of future investment and 23 per cent had reduced employee numbers as a result.

"Unsurprisingly, 38 per cent of those surveyed believe stabilising the New Zealand dollar is the key area requiring government assistance," the survey found.

Despite feeling the currency pinch, the survey also found that exporters remained "optimistic and resilient" in their outlook.

DHL Express general manager Phil Rountree said the survey found 70 per cent of exporters expected either an increase or stability in export orders in the year ahead.

About 60 per cent predicted further growth over the next three months.

"Exporters have noted that conditions are improving in international markets and the majority expect growth to continue over the next year," Mr Rountree said in a statement.

"It is likely that the work that New Zealand exporters have been doing to build brands and relationships in international markets is continuing to bear fruit," he said.

Sixty-eight per cent of exporters operated in more than one offshore market, with 70 per cent exporting to Australia, 43 per cent to North America and 32 per cent to the United Kingdom.

Two thirds expected an increase in orders from Australia.

"Western Europe remains a problem area for many with Eastern Europe, Latin America and the Middle East being selected as the most likely areas where export growth will ease over the next year."

When it came to profitability, 68 per cent of exporters predicted an increase in revenue over the coming year.

"The same attitude is also reflected in terms of wage increases with 78 per cent planning to raise employee salaries over this period," Mr Rountree said.

About 30 per cent of exporters - and then mostly the larger companies - engaged in hedging activity to protect against currency fluctuations.

At 10.30am today, the kiwi was fetching US68.58c and A92.19c. It had dipped on both crosses after the Reserve Bank today lifted the official cash rate by 25 basis points to 6.50 per cent.

- NZPA