NZ terms of trade sinks to 4-year low as high kiwi saps price of dairy and meat

Thursday 10th December 2009

New Zealand's terms of trade fell to the lowest level in four years in the third quarter, as the resilient kiwi dollar eroded prices for dairy products and meat, outpacing a decline in import prices.

Terms of trade fell 1.3% in the three months ended Sept. 30, according to Statistics New Zealand. That’s the lowest level since the fourth quarter of 2005. Exports prices declined 5.2% and imports slid 3.9%.

The Reserve Bank Trade Weighted Index, which measures the New Zealand dollar against a basket of currencies of major trading partners, rose 7.2% in the latest quarter. Prices for all the export groups measures fell apart from aluminium, today’s data shows.

The terms of trade index measures the amount of imports that can be purchased with a fixed amount of exports. Based on the decline in the latest period, 1.3% less imports could be funded by exports than in the June quarter, Statistics New Zealand said.

Export volumes rose 1%, seasonally adjusted, last quarter, paced by gains in volumes of dairy products and petroleum. Import volumes rose 1.9%.

Businesswire.co.nz

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