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Keep debate going on the dollar, Export New Zealand urges

-Press release

Friday 22nd June 2007

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As the New Zealand dollar spikes yet again, exporters are working furiously to keep their heads above water and their businesses profitable.

New Zealand's standard of living relies on its exporters, who send out goods from software to organic foods.

Exporters need to hear serious debate about the tools available to cool our hot markets and bring the dollar under control.

The New Zealand Reserve Bank has limited tools to bring the official cash rate - now at 8% - into line.

Raising the interest rate makes our currency desirable to offshore dealers. Proposals to use any form of tax as a tool are so unpalatable that the debate is over almost before it begins.

"We need to have an open and honest debate about the best way forward for New Zealand to deal with the overheated dollar," says Bob Walters, CEO of Export New Zealand. Closing down the debate is not an option; the discussion must be allowed to go forward.

Exporters are the ones most immediately affected in this debate but in the final analysis it is New Zealanders who will be the losers. The Reserve Bank can't continue pursuing a policy that will simply drive the productive sector out of business.

In the Independent Financial Review (20 June) columnist Chris Trotter writes: "And since the credit-worthiness of the nation as a whole is ultimately dependent on the profitability of its exporters, rather than its importers, financiers and consumers, it behoves the New Zealand state to find some way of keeping them in the black."

"Exporters are the backbone of the New Zealand economy. Resilient they may be but the present high levels of the dollar are squeezing the life out of many of them," Walters says.

The dollar has appreciated more than 19% against the US dollar and 30% against the yen in the past 12 months.

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