The Kiwi Dollar – and its effect on your business
Even if you don’t closely follow foreign exchange rates, you would no doubt be aware of the general performance of the New Zealand Dollar against the international trading currencies such as the US Dollar, the Great British Pound and the Euro.
Almost every news report will include information about our relationship with the rest of the world captured in this financial way, as it underpins so much of how we live day-to-day: In 2014 alone, New Zealand exported $42.6 billion and imported $41.6 billion worth of products.
It affects trade in both directions — both the sale and purchase of goods and services with foreign markets. Movements in the New Zealand dollar factors into the price that we pay to purchase goods from offshore. It also impacts the price at which foreigners buy our exported goods and services. Whenever it appreciates and depreciates, there are flow-on effects.
Put simply, the rise or fall of a local currency directly impacts the economy and its growth rate, because it changes the relative cost structure of goods and services both domestically and against other nations.
Petroleum, making up two of the top three products, accounts for a combined total of $5.81 billion of Kiwi imports. If you work in the agribusiness or transport sectors, you may feel the pinch when the New Zealand Dollar falls against the major currencies. Even if you’re in another sector altogether, such as retail or wholesale, the cost of distribution may increase for your small business – even if you’re only distributing your products locally in New Zealand.
What’s the good news, you ask?
Well, right now is a great time to maximise on importing goods to increase an inventory, expand your local operations or purchase new equipment. The Kiwi Dollar is at a two-month high against the Pound and performing similarly well (at the time of publishing) against the US Dollar. This means that imported products, such as petroleum in the above table, will be proportionately cheaper, and as a result, spur growth in the local New Zealand economy.
Likewise, no matter if you’re in the distribution, transport, agribusiness or wholesale industries – or something different altogether – you also have an advantage with the current trading climate. You could use a Spotcap unsecured small business loan to capitalise on the strength of the Kiwi Dollar to increase your operations for economies of scale, hire new staff or expand into a different region, for example – all while it’s comparatively cheaper to make your next business move.
Spotcap helps small to medium-sized businesses across a variety of sectors with unsecured, flexible lines of credit – so you can use the current trading climate to your advantage and kick start your business’s growth, for less.