Exporters engaged in risky business
JASON KRUPP, 16/07/2012
Exporters could be in for a costly shock if they don’t factor in the possibility of a spike in the kiwi towards the end of the year despite the souring situation in Europe and the slowing global economy.
That’s the view from a cross section of currency strategists, who see the kiwi recovering from its current bout of weakness as Western policymakers are forced to inject further stimulus into the global economy.
The warning comes as an analysis of fund flows by the Bank of New Zealand shows export firms are significantly under-hedged, with just 3.2 months of cover in place.
This level was about 38 per cent below the two-year average, the banks said.
The New Zealand dollar closed the week near the US79 cent mark, having swung between a low of US74.51 in June and the February high of US84.70.
Exporters typically buy the New Zealand dollar when it hits low levels,….”