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Where to next for the Kiwi dollar?
Milford Asset Management Portfolio Manager Mark Riggall has been tracking the shrinking Kiwi dollar and says there is scope for it to fall further yet.
“I’m not
ruling out our dollar falling to 60 cents against the US
dollar by any means. The dollar has been falling reasonably
steadily against the US dollar since the beginning of last
year. The big change over that period has been the change in
interest rates in both countries. Although in the medium
term the New Zealand economy looks like it’s going to
continue to slow, there are issues with the American economy
too, so medium term it’s probably a sideways trend for our
dollar, albeit within a fairly wide
range.”
However, if the Kiwi dollar continues to slide inexorably down, rather than staying in a sideways trend against the US, alarm bells will start to ring.
“A modest fall in the New Zealand dollar is
actually something which is potentially positive for New
Zealand assets, including shares, and that’s because in
foreign currencies they look cheaper. However, if the Kiwi
dollar was to slide more sharply from here, that would
likely signify a more rapid deterioration in the economy,
even after the fact that we’ve had significant easing from
the Reserve Bank. That would certainly ring alarm
bells.”
Although the low dollar is
broadly good for New Zealand exporters, Mark Riggall isn’t
seeing it boosting the bottom line of our inbound tourism
industry.
“We haven’t seen enough meaningful
evidence that tourism has turned a corner in terms of
picking up the pace of growth that we saw a couple of years
back, particularly with regard to the Chinese tourists that
come here. So, at the moment nothing has really changed in
terms of our view of any of the tourism
stocks.”
You can view Mark’s interview discussing these and other issues relating to the state of the Kiwi dollar if you click here.
ends
Milford Asset Management
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