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| Thread ID: 39416 | 2003-11-06 01:57:00 | OT: The rising Dollar... | csinclair83 (200) | Press F1 |
| Post ID | Timestamp | Content | User | ||
| 189543 | 2003-11-06 01:57:00 | Whats the big deal about it?... I'm hearing things about should the government intervene to curb the rising dollar? or putting more $$ ont he market... whats so bad about being 61c on the US dollar? or however it means? i remember some ppl were surprised we reached 51c but yeah... if it becomes $1=US$1...no big deal is it? or is it? I know i have no clue in the funny business of money...obviously... but i just wanna know what the deal is? |
csinclair83 (200) | ||
| 189544 | 2003-11-06 02:45:00 | Exporters receive less for their product and that is bad for the country, as our economy is based on exports. | Chris Randal (521) | ||
| 189545 | 2003-11-06 04:00:00 | Are you sure? I thought we are now in a Knowledge Wave economy. (Whatever that is.) Our leaders have said so, and I believe everything they tell us. :O I thought we were doing OK when the $NZ1.00 was worth $US2.00. Of course that was before the economic magicians said we had to be "efficient" and "global". |
Graham L (2) | ||
| 189546 | 2003-11-06 04:11:00 | If it rises, its good and bad for me: BAD - my dad (i'm still living at home) is an exporter = less NZ$ = less profit.... GOOD - buying things from Overseas is cheaper - good as I buy stuff from overseas, and importers sell stuff cheaper (they can get it cheaper) |
fergie (424) | ||
| 189547 | 2003-11-06 04:29:00 | Chris is right - it means exporters (and hence NZ generally) get less income from their exports. That has very wide effects throughout the NZ economy It also means that most imports are cheaper and so NZers put more and more on their credit card or the 'drip-feed' - also bad for the national economy in the long run. It's great for me as an importer - paying my US invoices gets easier every day. Jay |
j.harper (2905) | ||
| 189548 | 2003-11-06 06:43:00 | Actually this question is harder to answer than it might seem. Essentially we are a small isolated country with limited resources. We do not make our own sugar, trucks, or computers.We don't have much oil. So we have to buy these from countries which do. In turn we sell stuff we can spare. Mostly this is food, wood and fish. Tourism helps, but the Knowledge economy is an illusion - except in agriculture, timber and fishing where we have significant scientific knowledge. In fact little has changed in 150 years in terms of how we make money as a nation to buy what we want from others. The currency exchange rate reflects how many cents, dinars, pesos etc it takes to buy stuff in a country. So if a burger cost $1 in NZ then it should cost 60c in the USA. In fact an index is published by an American paper each year comparing currency rates with the cost of a McDonalds burger in each country. Often there is a difference with burgers being undervalued or overvalued. Anyway imagine your income varied from day to day based on outsiders views of your health. A bit hung over and suddenly you are down 20% on your pay. Makes it a bit tough to buy those goodies. Not fair, but in a simple sense that is how the rest of the world looks at our economy. A low rate means we have lots of $ inside NZ to spend which translates into wages, home renovation etc. But if any of that $ needs to be spent on an import then the cost is going to be high. Fine in a huge economy like Europe or USA which could shut their borders for 100 years and still have everything they needed. Not great for us. Exporters understandably groan when the $NZ rises cos it means less money for what they sell. But if that was the death knell for an economy then the USA, Britain, Switzerland etc with high value currencies would have folded up long ago. They haven't. In fact it is the third world countries in poverty with the cheap money and lets hope we are not headed there. |
Winston001 (3612) | ||
| 189549 | 2003-11-06 07:02:00 | Can you give an easy to understand example of why the rising NZ$ is bad for exporters? I don't quite understand it yet. | PoWa (203) | ||
| 189550 | 2003-11-06 07:23:00 | When an exporter sells products to overseas customers and receives payment in that country's currency he will receive more New Zealand dollars after the currency conversion if the dollar is lower than it is at present. For example if $US100 worth of goods were sold at an exchange rate of 61c he would receive $NZ164. If the exchange rate was 51c however he would receive $NZ196 which is quite a significant difference when it comes to hundreds of thousands or millions of dollars. | tommy (2826) | ||
| 189551 | 2003-11-06 07:29:00 | it's bad for me living overseas and wanting to send money home to nz.... | nadius (3249) | ||
| 189552 | 2003-11-06 07:39:00 | Ok Powa. The problem is we mainly export commodities. Big lumps of stuff. Wool, meat, butter, blue cod. Not much caviar or diamonds. Commodities are sold by many countries and prices are the same around the world. Imagine you currently sell 1 tonne of butter to an American company for $US100. If the exchange rate is US50c to $NZ1 then you convert the $US50 to $NZ100. But the rate changes to US60c to $NZ1.That is a 20% change. Now the payment from the Americans converts to $NZ83.30. Bummer. You have two choices. Put the price up, but they may go elsewhere, or you may be stuck with a contract to supply. Or, tough it out, cut costs, look for other buyers, new uses for butter which are more profitable. If the rate goes down to US40c to $NZ1 you are very happy. $US50 converts to $NZ125. In fact this is why there is so much money sloshing around NZ at the moment. It was generated by the dairy boom which ceased about a year ago. It takes a long time for money to trickle right through an economy. Does this help? |
Winston001 (3612) | ||
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