Kiwi decline tipped to continue

Rotorua BDO partner Stephen Graham said businesses with significant fuel costs such as forestry or transport would notice the decline. Photo / Andrew Warner

Rotorua consumers have been reaping the benefits of a high kiwi dollar, but there may be fewer bargains up for grabs over the coming months.

The kiwi has been in decline since touching a high of US88.35c last month and, yesterday, sat around US84.56c.

Westpac senior market strategist Imre Speizer said the drop in dairy prices, a strengthening greenback and risk aversion among investors globally had sparked the fall. It could fall to between US80c and US82c by the end of the year, Mr Speizer said.

Rotorua Chamber of Commerce chief executive Darrin Walsh said he hoped the drop would just be a "blip" that won't affect local businesses or consumers too much.

"For any businesses that import, any drop in the New Zealand dollar is going to have an adverse effect on them but confidence does seem rather high in Rotorua at the moment."

He said many Rotorua retailers imported goods from overseas so those costs might have to be passed on although he wasn't expecting it to have a "drastic effect" at this stage.

Rotorua BDO partner Stephen Graham said businesses with significant fuel costs such as forestry or transport would also experience increases as "the fuel companies are generally the first to use an exchange movement as an excuse to move costs up.

"Where businesses choose to pass these costs on, consumers will see an increase in costs. The first noticeable increase will generally be the cost of fuel. However, any product that is imported has the propensity to be more expensive - big screen TVs, computers, vehicles, mountain bikes."

House of Travel Rotorua director Ken Muller said the high kiwi dollar had been encouraging locals to take overseas holidays because their money went further when away.

"The US has seen big growth, not just to Hawaii, also to mainland USA," he said.

Mr Muller said he didn't think a weaker dollar would have a dramatic effect on local travel habits. They would still travel, but might have to spend more carefully while away, he said.

Atlantis Books owner Fraser Newman described the drop in the dollar as "annoying".

"If most of your bills are in foreign currency it adds a couple of cents. It's good for exporters but as a retailer it does push the price up of things we sell."

Rockshop manager Daryl Cogger said the higher dollar had been a "consumer's paradise" but it made it harder for retailers to achieve their targets.

"As price points come down, we have to work harder to maintain turnover. For retailers, it hasn't been easy because we have had to sell more product to make the same amount of money."

Readers on the Rotorua Daily Post Facebook page said they bought products such as books, make-up, clothes and Playstation games online from overseas. And although that may become slightly less of a bargain with a falling dollar, one saw the bright side for Rotorua.

"It means more tourists can afford to come here and spend money in our shops."

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