26 Jan 2010

Decline of NZ dollar expected to be shortlived

7:12 am on 26 January 2010

The New Zealand dollar fell nearly four cents against the US dollar in the past week, but a currency expert says the decline will be shortlived.

Rankin Treasury Advisory director Derek Rankin is tipping the kiwi, which is currently trading at 71.5 US cents, to climb as high as 82 cents this year, as the economy recovers from recession.

He says the New Zealand dollar is appreciating and will see the highs of two years ago, again.

Mr Rankin says it's not just due to New Zealand interest rates, but also a good overall economic outlook.

However, others are more conservative in their forecasts.

Westpac predicts the New Zealand dollar to rebound to a peak of 76 US cents in the next six to 12 months.

The Manufacturing & Exporters Association fears the high New Zealand dollar will wipe out any gains in 2010.

Chief executive John Walley says 2009 was a very tough year for the sector, with 13% of the workforce losing their jobs.

He says the New Zealand dollar has been a severe hindrance on the sector since it climbed above 70 US cents in September and he sees matters getting much worse if the dollar continues to climb.

At 6.40am on Tuesday, the New Zealand dollar was trading at 71.40 US cents, 79.03 Australian cents, 44.00 pence, 64.41 yen and 0.5044 euro. The Trade Weighted Index was at 64.92.