The precipitous plunge in the NZ dollar, as carry trades desert the Anzac currencies, has tilted the economy back in favour of the export sector. The Kiwi is down by a third against the peak of US82c, and 40% against the yen. But exporters are concerned the long-awaited re-balancing of the currency may not bring as full benefit as they hoped for, should commodity prices retreat as sharply in the next few months. More than half NZ’s lamb exports go to the UK and Europe where the currency fall has not been as steep. Against the more favourable exchange the farm sector faces input costs which are already high, but likely to move higher because of the currency depreciation. Meanwhile the import sector faces a huge leap in the cost of goods bought abroad. The more acute issue may arise from the steep rise in capital goods essential for NZ’s economic growth.

 Copyright © Trans Tasman Media Ltd