Kiwi dollar drops to three-year low against the US dollar

The New Zealand dollar has continued to fall, trading at an almost three-year low against the US dollar on Monday - and while motorists are already feeling the effects, it's good news for some.

A weaker dollar means higher costs for imports like petrol, and that's often passed onto the consumer, ANZ Chief economist Sharon Zollner says.

"It will gradually feed through to everything we buy - from cars to computers, to food we import as well."

The dollar dropped sharply on Thursday, after the Reserve Bank's surprising announcement it was holding record-low interest rates well into 2020.  

The kiwi had been tracking down for some months, sitting at just under 74 cents on the US dollar in mid-April.It fell below 66 cents for the first time in two-and-a-half years on Friday and opened at 65.68 cents on Monday.

And it's not just local economic factors driving the dollar down.

Turkey's economic woes are having ripple effects in the global market, compounded by US President Donald Trump hitting the country with sanctions and tariffs.

"New Zealand is a small, open economy so we are very exposed to what is happening offshore," Ms Zollner says.

As for the goods we are sending offshore - a weak dollar benefits exporters.

"It's always something we watch - everyone watches it in the exporting industry," Beef and Lamb chief economist Andrew Burtt says.

In the past a fall in the kiwi dollar has helped meat exports hit record highs in the past, and that return is pumped back into the overall economy.

"What pays for that fuel and your coffee on Lambton Quay is exporting things, so we can buy things we aren't good at producing, like coffee beans," Mr Burtt says.

That means exporters are welcoming ANZ's projection that the kiwi may fall to 61 cents on the US dollar by the end of next year.

However, predicting the exchange rate is a fickle business at the best of times - even more so with increasing uncertainty in the global markets.

Newshub.