New Zealand Report: Selwyn Manning delivers his New Zealand Report bulletin to FiveAA.com.au’s breakfast team Dave Penberthy, Mark Aiston, and Jane Reilly. This week they discuss how the Reserve Bank of NZ has forced interest rates and the currency down + Rotorua’s Papakura Geyser blasts into life – Recorded live on 11/09/15.
While Australia’s Labor Force figures pushed up your dollar yesterday, New Zealand’s dollar fell sharply after the NZ Reserve Bank forced interest rates down.
And while economists see our two currencies as joined at the hip, the Kiwi is sinking faster against the US – giving some extra returns to cash-strapped farmers and perhaps an affordable holiday destination for Australians.
Last night the Bank of New Zealand was offering NZ$107.05 for AU$100.00 – (which isn’t too bad considering how much you dish out for one US dollar).
It has been a tight-rope walk for the Reserve Bank governor Graeme Wheeler. By forcing interest rates down, it risks overcooking an already hot Auckland residential housing market.
But the risks associated with doing nothing, and permitting the NZ Dollar to remain overvalued, would likely drive thousands of dairy farmers into insolvency, and the country into recession.
Yesterday Wheeler said: “Domestically, the economy is adjusting to the sharp decline in export prices, and the consequent fall in the exchange rate. Activity has also slowed due to the plateauing of construction activity in Canterbury, and a weakening in business and consumer confidence.”
So the Reserve Bank, rather than the Finance Minister, is returning New Zealand to an export-led environment, making it less dependent on domestic consumption… which raises the question: was it wise for the National-led Government to hike up GST to 15%?
I can see government cuts to social spending on the horizon.
And if you think New Zealand isn’t hot enough for a holiday, check this out. After 35 years of being considered dormant, Rotorua’s Papakura Geyser blasted into life this week.
The geyser was once a grand tourist attraction, but around 1979 it began to fizzle out, relegating itself to a mere boiling mud pool.
No longer… Staff at the Te Puia Te Whakarewarewa Thermal Valley in Rotorua say ole Papakura has awoken and is now shooting steam and boiling water up to 4 metres high.
Actually, before heading to Rotorua, it might pay to check your insurance policy… Only last week an unknown sleeping geyser woke up and blasted a huge hole out of the side of a road.
In a brilliant quote of stating the obvious, Volcano specialist Brad Scott said: “It is early days in our scientific investigation of these developments, but the geyser has clearly entered phase two of its recovery.”