Buying Power Of Exports Rides Surge In Global Dairy Prices
NEW ZEALAND - Soaring dairy prices have pushed the international buying power of a basket of New Zealand's exports to the highest it has been since 1974.
12 June 2007
1 minute read
| Dairy product prices rose 2.8 per cent in the March quarter, led by prices for milk powder. |
The terms of trade improved 2 per cent in the March quarter, Statistics NZ said yesterday, which means that 2 per cent more imports could be funded by a fixed quantity of exports than in the December quarter.
The exchange rate rose against the currencies of all our major trading partners during the March quarter, including a 4.1 per cent appreciation against the United States dollar.
"The high terms of trade are driving the New Zealand dollar higher, meaning that it is consumers rather than exporters who are benefiting most," said Westpac chief economist Brendan O'Donovan.
But the Reserve Bank singled out the high terms of trade as a major reason behind last week's official cash rate increase.
Source: The New Zealand Herald
