Will To ‘Resist’ Currency Appreciation Encouraging

Will To ‘Resist’ Currency Appreciation Encouraging - 17 April

John Key’s comments that the Government is considering what can be done to resist the high New Zealand dollar are encouraging say the New Zealand Manufacturers and Exporters Association (NZMEA). Key made the comments to the Indonesian Economic Committee.

NZMEA Chief Executive John Walley says, “Clearly when Statistics New Zealand finds that 37 percent of exporting firms identify exchange rate volatility as a barrier to generating overseas income and 34 percent identify the exchange rate level as a barrier, we have a serious problem. Any action to reduce this impact will be welcomed by exporters.”

“The Swiss have shown what can be achieved in a short space of time with deliberate and committed currency intervention. Certainly the decision to leave our currency untouched while most of our competitors take measures to reduce theirs has been disastrous for the real economy.”

“Our current account balance should be the target of exchange rate action,” says Mr Walley. “We must generate a current account surplus to emerge from our debt problems unscathed. A more stable, competitive exchange rate is a precursor to growth in the real economy which will push our current account towards surplus.”

“There are a number of options available to John Key if he is serious about addressing the exchange rate; in the end the will to make the change is the starting point.”

ENDS

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