29 Sep 2010

Kiwi tipped to remain high against US dollar

1:29 pm on 29 September 2010

BNZ senior economist Doug Steel says the New Zealand dollar is likely to remain high against the US well into next year, with mixed consequences for exporters.

The Kiwi gained nearly a cent after a weak US dollar pushed it through the 74 cent mark on Wednesday morning.

Mr Steel says the kiwi is likely to remain elevated and could reach as high as 75 US cents, as the domestic economy continues to strengthen while the US dollar remains weak.

Mr Steel says a high dollar won't hurt dairy exporters, as high prices effectively cancel-out the effect of the strong dollar, but those experiencing low prices, such as beef farmers, will be hit.

"Part of the reason," he says, "is that the world is buying what we export at high prices.

Mr Steel says businesses selling to Australia are being hit by a relatively weak exchange rate, but strong growth across the Tasman means they are still experiencing good returns.

At 12.05pm on Wednesday, the New Zealand dollar was trading at 73.90 US cents, 76.40 Australian cents, 46.76 pence, 62.01 yen and 0.5445 euro. The Trade Weighted Index was at 66.61.