Caroline Ritchie: You've got to be joking

A fantastic poll came out last week, entitled, "Do you intend to take advantage of the high Kiwi dollar by travelling overseas?"
Brilliant! The joyous manner in which the poll was presented almost gave the impression that our soaring exchange rate could mitigate the cost of an entire international ski trip.
It was as if the magic genie of the money markets could produce a trip to Las Vegas so affordable that we should all leave immediately. Naturally that kind of poll always gets a few laughs, because for most people there is not much left over each month and flitting off overseas is about as likely as flying to the moon.
At the time of writing our Kiwi dollar could be exchanged for 86 United States cents. Currency strategists, (more cagily known as monetary clairvoyants), suggest that the rate may surpass 90 cents and beyond. Parity (dollar for dollar) is possible in the short term, apparently.
Currency prediction, like crystal ball gazing, is not for the nervous and is very difficult to do consistently. But we have to give it a crack because the currency, when offshore investing, is a primary concern.
Over time, in the way that swings and roundabouts operate, currencies have long-term averages against their respective counterparts. An average is just that, however. There is no guarantee that the Kiwi is due for a retraction just because it is historically high.
With fundamental weaknesses showing in the US dollar, and our economic figures looking slightly better than those around us (although it has to be said these are not terribly flash), the New Zealand dollar could remain high for years.
This is not what our primary manufacturing industries or agricultural chaps want to hear, but there is little alternative.
Currency intervention for protectionist purposes has been proven historically in nearly every case to be a nationally-expensive failure.
Markets are watching and waiting until next Tuesday, US time, when it will be Debt Ceiling Decision Day. With talks stalling and political infighting making the process look wobbly, investors need convincing things will be okay, and fast. Until then, we need less talking and more action.
This situation is not sustainable, yet at the same time is out of our hands.
Caroline Ritchie is an NZX adviser for Forsyth Barr in Napier and holds an NZX Diploma, BCom and BSc. For sharemarket advice contact her on (06) 835 3111 or caroline.ritchie@forsythbarr.co.nz
Caroline Ritchie's disclosure statement is available on request and free of charge. This column is general in nature and should not be regarded as personalised investment advice.