Kiwi dollar likely to climb from 14-month high
October 5th, 2009
Business confidence bounded to a 10-year high last month and there’s likely more to come, since the survey was taken before Fonterra announced the increase to its milk payment for 2010. The agricultural sector isn’t quite on a tear but it is heading in the right direction, with confidence bounding between August and September. Stephen Toplis, head of research at BNZ says “while global and economic data continue to print positive, the currency is going to go higher. The Fonterra payout is tangible and in theory takes the higher kiwi into consideration.”
Toplis says the danger time for the currency – when it has more scope to push lower – will be next year, after the economy has rapidly emerged from recession and traders begin to focus again on underlying imbalances in the economy. By then, the big jumps in prices at Fonterra’s monthly milk powder auctions may have abated. Toplis says “I can’t imagine prices going up 25% a month from here on in. Still, if global growth continues the price increases we’ve seen should be able to stick.”
Copyright © The Main Report Group - NZ AGri-Business
