Dollar drops but no miracle cure
Wednesday 27 Feb 2013 4:49 p.m.
The kiwi dollar has slumped after nervous foreign investors started pulling their money out.
But it's not our economy that's spooked them, it's fears of fresh problems in Europe.
Just days ago, the dollar was being called the "new gold" by overseas investors on business channel CNBC.
“I like buying the kiwi dollar, the New Zealand dollar, I love doing it versus the US, but you also can do it versus the yen, especially right here,” said Brian Kelly on the channel.
And perhaps that jinxed it, because the kiwi fell by a cent overnight as traders booked profits and took their money home, spooked by an Italian election that produced no clear winner.
The potential kingmaker is a joker in every sense: Beppe Grillo, a professional comedian. Mr Grillo's pledging a 20-hour working week, tax cuts and a referendum on the euro.
Twenty-five percent of voters backed him, though Mr Grillo appeared briefly to say he's not interested in horse trading or coalitions.
But don't count on the kiwi to keep falling. Finance Minister Bill English says that won't happen until economies like the US improve.
“At the moment we are in reasonable shape. They are in poor shape. They are likely to improve, [and] that may take a bit of the pressure off us,” says Mr English.
But any change won’t happen overnight, leaving exporters to learn to live with a higher dollar.