New Zealand: New Zealand Dollar strengthens, reaching multi-year high
July 16, 2014
The New Zealand dollar (NZD) is continuing on its upward trajectory against the U.S. dollar (USD), reflecting the country’s strong economic performance during recent quarters and the Reserve Bank of New Zealand’s (RBNZ) decision to continue its interest rate tightening cycle. In recent months, the kiwi dollar has gained strength. It reached a multi-year high on 9 July when the currency traded at 0.88 USD per NZD, which was 3.9% stronger than the value recorded a month earlier and 12.3% stronger than the exchange rate tallied in the same month last year.
Meanwhile, there are concerns that the strong kiwi dollar is a headwind for the exports industry, particularly as New Zealand’s recent strong economic performance is largely built on exports to China, a main destination of New Zealand’s dairy products. Until several months ago, the negative impact of the high New Zealand dollar on exports was largely compensated for by record-high international agricultural commodity prices; however, prices fell significantly during the past months and they may even decline further going forward.