Across The Ditch: Peter Godfrey and Selwyn Manning deliver their weekly extended bulletin Across The Ditch: This week China’s Currency Devaluation Threatens Viability of New Zealand Exports + All Blacks V Wallabies at Eden Park Auckland this Saturday. Also, there are 40 new New Zealand flags on offer – Recorded live on 13/08/15.
New Zealand exporters trading with China are anticipating a complex and costly path ahead after China devalued its currency the Yuan this week.
The nations most exposed to China’s economic trajectory are Australia, South Korea, New Zealand, Japan, Malaysia, and Thailand.
Particularly vulnerable in New Zealand is Fonterra, the dairy powder export giant. Fonterra has been struggling to strike a viable deal for Kiwi farmers. Last Friday, Fonterra announced it would top up the dismal $3.85 per kilo of milk solids rate with a 40-50 cent dividend.
The top up deal was designed to give some certainty to farmers caught up in this sinking phase of the commodity cycle.
For example, last week thousands of dairy farmers throughout New Zealand were facing insolvency after another disastrous global auction saw dairy commodity prices collapse below the farmyard gate break-even price.
That’s when Fonterra stepped in with its top up deal. But now, Fonterra is also facing a drop off in returns anticipated from its exports to China.
This has huge implications for the dairy sector in New Zealand, especially as the National-led Government agreed with China in 2013/14 to calculate two-way trade based on the New Zealand Dollar V the Yuan.
China’s devaluation of the Yuan couldn’t have come at a worse time.
New Zealand’s currency has been devaluing by degrees over the past six months, offering some relief to exporters. But with China also devaluing its currency this week, those gains, in broad terms, are wiped out.
All Blacks V Wallabies Update!
Peter, we called it right for last Saturday’s test with Australia beating the New Zealand All Blacks 27-19.
But on Saturday, the Wallabies will attempt to make it two in a row, this time taking on the All Blacks at Eden Park.
In the New Zealand Herald this week, Australian Rugby great Phil Kearns, predicted the All Blacks will hit the Wallabies like a pack of “mongrel dogs”.
Kearns said: “I think New Zealand will come out like complete mad mongrel dogs and will endeavour to teach the Wallabies a lesson,” Kearns said. “I think it’ll be a close run race with the All Black’s just winning.”
The Herald also cleverly pointed out, the All Blacks have gone 37 straight tests without a defeat on home soil.
And consider this… The All Blacks haven’t lost a test at Eden Park for over 21 years… since July 3, 1994.
The last time the Wallabies played the All Blacks at Eden Park, NZ won 22 Australia 0. That was on Aug 25, 2012.
Having laid that out pretty thick, my guess is a New Zealand win on Saturday night!
The NZ Flag
40 potential replacements for the New Zealand flag have been selected. What does this all mean.