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NZD back in focus for exporters and RBNZ - ANZ

Discussion in 'Fundamental Analysis' started by FXStreet_Team, Mar 31, 2016.

  1. FXStreet_Team

    FXStreet_Team Well-Known Member Trader

    Oct 7, 2015
    Likes Received:
    Analysts at ANZ explained that the NZD has crept back in focus for exporters and the RBNZ alike.

    Key Quotes:

    "For exporters the run back up above NZDUSD 0.69 and to 73.3 on the NZD TWI is proving eye watering. For dairying, the sector under the most pressure at present, the run back up is especially painful as a lower NZD is a key reason that a better income outlook in 2016/17 has been flagged. If this doesn’t prove to be the case there will be serious industry concern."

    "While the dairy and the sheepmeat sectors remain under pressure, prospects elsewhere range from steady to stellar. New Zealand’s meat supply volumes are expected to be down by close to double digits, but this is helping to support prices and further gains are anticipated.

    The main horticulture crops are on track to post impressive yields, and combined with solid prices, are likely to deliver very profitable returns. Forestry prices are being supported by domestic building activity and shipping rates at multi decade lows are helping.

    The high NZD doesn’t seem to be putting off tourist flows either, although there will be an impact on spending. Individually these export earners don’t totally offset the pain from dairying, but collectively they provide a significant offset. That said, a sustained run up in the NZD will become increasingly problematic for the wider export sector, the level and mix of growth and the degree of inflationary pressure in the system. The RBNZ has more work to do and we expect 50bps of OCR cuts by the end of the year."
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