Kiwi dollar’s slippage brings Robertson’s “robust economy” rhetoric into doubt

Just   as   New  Zealanders start  planning  their first overseas  travel  since Covid  led  to  lockdowns,  they  find their dollar  has  slipped  in  value  against  other  major  currencies.

This could   be  of  particular concern  for  those  senior  citizens  who  were looking  forward to having  a  break during  New Zealand’s  winter  months  in the  sunshine   of Australia’s  Gold  Coast.

The  irony  of  the fall in  the  value  of  the  NZ  dollar is  its  contrast  with Finance  Minister Grant Robertson’s  insistence  that  the  NZ economy  has performed  strongly  (under  his  guidance) through  the  pandemic.

On  that  point some  authorities  have noted the  NZ  dollar has  lost  ground in  comparison  with  Australia, even though  NZ  has  higher  interest rates   than  Australia.

But if  Kiwis  think  the  beaches in  Hawaii might  offer  better  value  for their dollar than those  of  Queensland,  they  will have to think  again,  because the  NZ  dollar  has slipped  also  against the  greenback.

There is a further message in the  comparison   with  the  AUD.  It implies  financial markets have  concluded   that  the  Australian  economy is  more  productive  than  NZ’s.

The  positive   to  be  drawn  from the  currency  movement  is  that   NZ’s  export  sector  will  have  higher  returns, (in local dollar  terms). The  dairy  industry  may  find it  offsets  the  lower  prices  recorded in the  fortnightly  Fonterra GDT  auctions, if  the  fall against the  US  dollar  to  below 65USc  is  sustained.

On  the  other  hand industrial commodities  have  been  falling  sharply:  this  movement  means  that returns  for aluminium  (from  the  Bluff  smelter) and  methanol   (from the Motunui  plant) will be  lower.