Currency problem 'worse than 2007'

Currency problem 'worse than 2007'

The currency problem is worse than in 2007 despite slightly lower cross rates say the New Zealand Manufacturers and Exporters Association (NZMEA). The lower sales volumes in today’s market mean that the low margins are hitting exporters much harder.

NZMEA Chief Executive John Walley says, “When the dollar hit post float highs in 2007 we had strong worldwide demand to offset lower margins. Now coming out of the recession demand remains relatively weak, and it has to be remembered that firms that have made it this far have already cut out any fat from their processes.”

“There has been some talk that exporters need to use the high currency to buy equipment from offshore, or that exporters have somehow learned to cope with an overvalued currency.”

“Such comments are simplistic. Exporters who have made it this far are sharper, but they have been burnt once too often and they are not investing in capacity expansion. Why risk more capital? That is the question I hear most often,” says Mr. Walley.

“The graph shows that since 2004 there has not been any sustained period where the dollar has eased off. Short and medium term volatility coupled with consistent speculative pressure overvaluing the currency sap the life blood out of expansion and investment in the real economy.”

“It is clear that what we have is not working, we need to find a practical solution

ends.”

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