ASB Kiwi Dollar Barometer tracks exporters’ and importers’ exposures to foreign exchange risk reports that businesses expect the NZD to peak against the US dollar in March
Auckland, NZ -- (SBWIRE) -- 09/13/2013 -- - Businesses expect the NZD/USD to peak at 0.803 in March 2014 before falling to 0.753 by September.
- Increased interest to hedge amongst importers due to expected depreciation.
- Majority of businesses shortened duration of hedging in response to recent shifts in the NZD.
New Zealand businesses expect the NZD to peak against both the USD and AUD in March 2014 before easing according to the latest ASB Kiwi Dollar Barometer.
“While both importers and exporters expect the NZD/USD to depreciate over the coming year, exporters are expecting a much larger decline in the currency by September 2014,” says ASB Chief Economist Nick Tuffley. “This large divergence between importers and exporters’ expectations likely reflects the high degree of uncertainty over the NZD outlook in light of the relatively wide range the NZD/USD has traded in recently.”
The expectations of a depreciation in the NZD have seen increased interest to hedge amongst importers. In contrast, exporters have trimmed back hedging intentions. However, exporters that do intend to hedge continue to plan hedging a higher proportion of their FX exposures than importers plan to.
The Barometer finds the majority of businesses have reduced the duration of their hedging in response to recent shifts in the NZD, with exporters tending to shorten the duration of hedging by a greater length of time compared to importers.
“The NZD has traded over a relatively wide range in recent months, leading to increased uncertainty over which direction the currency will go in the coming year. Increased volatility also means it is now more expensive to hedge using options. These factors may be discouraging some businesses from hedging too far out in time,” concludes Mr Tuffley.
The ASB Kiwi Dollar Barometer tracks exporters’ and importers’ exposures to foreign exchange risk, through surveying businesses with annual turnover of at least NZ$1 million. The Barometer also surveys businesses’ expectations for the NZD/USD and businesses’ hedging plans for managing foreign exchange risk. For the September 2013 edition of the ASB Kiwi Dollar Barometer, East & Partners interviewed 385 businesses turning over at least NZ$1 million per year. The interviews were conducted from 23rd July to 2nd August. Businesses were asked a range of questions about their exposure to and views about the NZD. ASB Bank offers bank accounts, personal and home loans, Kiwisaver, investments, foreign exchange, insurance, internet banking, credit cards and online calculators to help with your banking needs. Visit us today at http://www.asb.co.nz