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Have your say: NZ First leader Winston Peters wants to control NZ dollar similar to Singapore. Your view?
New Zealand First leader Winston Peters has proposed managing the New Zealand dollar within a set range, similar to how the Singaporean government controls its currency, TV3 and Radio Live report.
Mr Peters says currency speculators have been the only people to gain from the float of the dollar - with business and exporters paying the cost.
Prime Minister John Key said in October there was very little the government could do about the high New Zealand dollar in the face of currency wars between China and the US.
However he noted the NZ dollar was at a level where it was "starting to create some concern [for exporters]".
Last year New Zealand Manufacturers and Exporters Association CEO John Wally raised the issue of New Zealand managing its currency like Singapore on interest.co.nz. Read more here.
Meanwhile, the NZMEA today said New Zealand's currency problem was worse now than in 2007, and reiterated its call for changes to the government's stance on the New Zealand dollar:
Currency problem 'worse than 2007' - 1 November
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.
“[A chart of the NZ dollar against the US dollar] 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.”
(Updates with chart, link to Key's October comments, NZMEA release, NZMEA link)