15 Oct 2013

NZ 'could be vulnerable' to US debt default

10:15 am on 15 October 2013

An American business professor says New Zealand could be vulnerable if the United States fails to raise the so-called debt ceiling.

The US Treasury will run out of money on 17 October and if the debt limit is not extended, the country will not be able to pay its bills.

Alan Beckenstein, from the University of Virginia, says that would raise interest rates for mortgages here and boost the value of the New Zealand dollar - whichwould be bad news for exporters.

Professor Beckenstein says a default is unlikely, but continuing wrangling about the debt ceiling will hurt confidence in American bonds.

He says New Zealand is vulnerable to a default because it is highly reliant on foreign lending.