Jason Wong, Currency Strategist at BNZ, suggests that their projections for the next year have the NZD/AUD cross consolidating in a 0.93-0.96 range, so exporters should be looking to hedge exposure on any dips into the low 90s.
“We see NZ’s cyclical outlook as more positive compared to Australia and this should be reflected in a tighter labour market and the development of higher relative inflationary pressure. We were expecting the relative terms of trade in NZ’s favour as well, but an expected surge in Australian coal prices has prevented that for now, and helped reduce the cross from mid- September heights. Our longer term projections have an eventual move to parity, possibly sometime in 2018.”
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