The New Zealand dollar hit a four-year high against the Japanese yen yesterday, prompting concern from local exporters whose returns are getting eroded by the exchange rate.

The kiwi reached 71.33 after Japan's Liberal Democratic Party, which has promised to aggressively ease monetary policy, won a landslide election victory. By 5pm the New Zealand dollar had slipped back to be trading at 70.91.

Grant Rosewarne, chief executive of Marlborough-based New Zealand King Salmon, which sends around 20 per cent of its exports to Japan, said the firm had foreign exchange hedging cover, but that only partly offset the impact of the weakening yen.

" It [the exchange rate] is problematic for us - we're making low margins on our Japanese business. "


Currency strategists expect the yen to weaken further versus other currencies as the Liberal Democratic Party, led by former Prime Minister Shinzo Abe, carries out its pledge to print money and stimulate a faltering, deflation-wracked Japanese economy.

Japan, New Zealand's fourth-biggest trading partner, accounted for almost 8 per cent of this country's total exports in the year to June 2011. Exports - mostly aluminium, dairy and forestry products, meat, seafood and vegetables - reached $3.4 billion last year.

Eion Garden, chairman of Silver Fern Farms, said Japan and other Asian countries had been consistently strong markets for the company.

"The exchange rate strengthening in any of our Asian markets is absolutely significant," Gardner said.

Meanwhile, the New Zealand dollar, which was trading at US84.40c against the greenback at 5pm last night, is expected to breach US85c this week.

New Zealand Manufacturers and Exporters Association chief executive John Walley said the kiwi's strength against the US dollar was "clearly a worry".

"The longer it's up there and the longer it stays there, the more difficult it becomes and [exporters] are left with the options of quit, move or hang in there."

Rosewarne said the Government should take action, such as lowering the official cash rate, to weaken the kiwi and give exporters a helping hand.


"There's certainly levers they can pull that would be helpful."