The exchange rate

You probably don't think about the value of the New Zealand dollar unless you're travelling overseas or buying goods from other countries using the Internet or mail order. Yet the value of the New Zealand dollar has an indirect impact on us all.

That's because the price of everything we buy from overseas is affected by the exchange rate between the New Zealand dollar and overseas currencies. That includes imported raw materials for goods made here. If the Kiwi dollar rises in value against other currencies then imported goods will become cheaper.

But a rising dollar isn't good for exporters, because the revenue from selling their goods and services overseas is worth less when converted into New Zealand dollars and their goods and services may become more expensive for the people buying them in other countries and. If our exporters can't sell their goods then they may not be able to continue to employ as many people.

The fewer people we employ means less money in the economy to spend, which in turn affects businesses that rely on the local market.

Summary

• The Kiwi dollar rises and falls against other currencies.
• A high dollar benefits importers and makes overseas goods cheaper.
• Exporters usually prefer a low dollar because it earns them more revenue and may make their products cheaper for overseas buyers.