Christmas bargains at risk thanks to falling dollar

  • 07/10/2018

Economists believe the retail sector will bear the brunt of a falling New Zealand dollar.

It has plummeted to 64 US cents, but remains stable against the euro, Australian dollar and yen.

ANZ chief economist Cameron Bagrie says the further the US dollar goes up, the more expensive imported products will be.

"You're going to see retail margins under a fair bit of pressure at Christmas, because they're going to struggle to recover."

But Mr Bargie says the New Zealand dollar is a long way off its low trading levels during the 2008 financial crisis.  Then it fell as low as 49c.

It's expected to fall as low as 60 US cents this time around, as the American dollar is bolstered with high interest rates gathering capital.

Mr Bargie says it will lead to further hikes at the pump over the next few weeks.

But there is silver lining.

"There's two sides of the coin - the exporters are doing pretty good out of a weakened NZ-US dollar."

The trend is also expected to impact the cost of travel to American domicile markets.

But Mr Bargie says it's not one-way traffic.

"The New Zealand dollar has not been hit too hard against other major trading partners such as Australia, Japan and the euro."

The NZ dollar is currently worth 91 Australian cents.

Newshub.