Source: MIL Analysis
Headline: Across the Ditch – NZ Exporters Facing Tough Times + The Olympic Heroes’ Return
Across the Ditch: Australian radio FiveAA.com.au’s Peter Godfrey and EveningReport.nz’s Selwyn Manning deliver their weekly bulletin Across the Ditch. This week they discuss how the latest statistics show how exporters are finding it tough to get a decent return – it’s all due to the NZ dollar being too high against the US greenback. And the NZ Reserve Bank and the Government seem to be powerless to do anything about it. ALSO, NZ’s Olympic heroes have returned to New Zealand to huge excitement.
First up: Weather comparison, Headlines Roundup.
INDEPTH – ITEM ONE: NZ Exporters Facing Tough Times
With the NZD sustaining its climb against the USD, Kiwi exporters are finding it touch going.
It seems the current policy-set used by the Reserve Bank to keep inflation between 1 and 3% is failing.
Reductions to the Official Cash Rate are failing to bring the dollar down, and failing to see a further marked reduction in mortgage interest rates. That width between the OCR which is 2% and the rates offered by banks upwards around 4% is an attractive return, keeping the demand for the NZ Dollar high – all this at a time when exporters need a lower dollar to maximise the returns for their goods and services.
As wisdom suggests, the higher the NZ dollar goes against the Greenback, the less money exporters get back for their work. It’s the same story for Australian exporters.
Here in New Zealand it’s becoming a big problem, not just for farmers and share milkers, but also for rural New Zealand and the broader New Zealand economy.
Take Wednesday’s release from Statistics NZ:
* Overall, meat and edible offal exports in July were down 19 percent on July 2015, to $408 million. The largest fall was in lamb exports, which fell 29 percent in value and 25 percent in quantity.
* Dairy exports also fell in July down $88 million. Milk powder fell $118 million but was partly offset by rises in butter and natural milk constituents. The fall in value of milk powder was ‘price-driven’, as the quantity rose 0.9 percent.
* The balance between overall exports and imports meant a goods trade deficit of $433 million in July. (ref. ForeignAffairs.co.nz )
Wednesday’s NZ dollar sat around 0.728 US cents for every NZ$1, after pushing up to 73.3 cents yesterday.
In May, former Governor of the Reserve Bank Don Brash said to me, the closer to 80 US cents our dollar goes, the higher the risk that rural NZ will become an economic desert.
The current Government is remarkably silent about what to do about this situation. And Labour’s finance spokesperson is far too quiet about what tool-sets he would present to the Reserve Bank should it become government next year.
Meanwhile, exporters are struggling to make a decent buck, while politicians wait until election year before rolling out their parcels of policy.
ITEM TWO: The Heroes’ Return
New Zealand won more Olympic medals than ever before. At Rio Kiwis won 18 medals, including 4 Gold medals, 9 Silver medals, and 5 Bronze medals.
And most of our Olympic athletes returned home yesterday to huge crowds and applause.
The country is very pleased indeed and in particular with the manner in which the athletes competed. National pride is good and strong.
ALSO: The All Blacks beat the Wallabies 42-8 at Sydney last Saturday night.
If you can stand it, www.AllBlacks.com has all the detail, including an evaluation of the Wallabies as they head to Wellington NZ for the second of three tests for the Bledisloe Cup. I hate to say it Peter but the All Blacks have held the Bledisloe Cup since 2003. Sorry about that.
The stats are against Australia on this one: The Wallabies haven’t beaten the All Blacks on Kiwi soil since August 11 2001. But Australian Rugby great, Peter FitzSimons said on Radio New Zealand last week the Wallabies have what it takes to remove the All Blacks’ grip of the Bledisloe Cup. Perhaps this Saturday, at Wellington’s Cake Tin, they will do it.