3 Feb 2012

Exporters, manufacturers 'coping' with high dollar

10:43 am on 3 February 2012

Finance Minister Bill English says exporters and manufacturers seem to be coping despite the New Zealand dollar climbing above US80 cents.

The Kiwi has risen more than 5 cents against its US counterpart since the start of the year and is trading close to a five-month high.

Mr English says the high dollar does have some benefits.

"The good news is that it maintains consumers' purchasing power, so it's helping them pay off their debt and our exporters have adapted to it pretty well.

"So despite the fact that it's historically high, our manufacturing sector has been growing and our primary production sector has just had the biggest export quarter it's ever had.

"I wouldn't say no worries - it's a headwind. We need to ensure our exporters can be competitive at US80 cents - and they're showing they can be, and I think that's positive for our future."

New Zealand Manufacturers and Exporters Association chief executive John Walley agrees that some manufacturers are coping well - but warns others are struggling.

"The currency in the 80s is a major problem for our hi-tech sector and it's a bit like the story of the old donkey - we feed it less and less and it still keeps working and then one day it drops and dies and we wonder why.

"A high currency means that you don't get much margin from your sales and if you don't get much margin, you're not really in a position to invest.

"And we are talking about sales to the wider world in US dollars. Some players are selling into Australia for Australian consumption are reasonably pleased with the situation at the moment, so it's just down to particular circumstances."

John Walley says he has no doubt that with the New Zealand dollar so high, activity will continue to contract - and that means job losses and businesses closing or moving overseas.