Wednesday, February 27, 2008

NZ's high interest rates; the kiwi dollar's rise

New Zealand has some of the highest interest rates in the world, says Export NZ.

The association of exporters claims these are driving up the currency, which reached a new, 23-year high of US81.80c about 11.30am today.

"As a result, productive and export sectors are hurting," says Export NZ chief executive Bob Walters. "This will affect the living standards of all New Zealanders."

Official interest rates are set at 8.25 percent to fight inflation, which is sitting at 3.2 per cent - just above the target band.

Today's rise in the dollar led to new calls from exporters and economists for the Reserve Bank to cut rates.

The high dollar is, of course, good news for consumers, who can expect import prices to at least hold. As a saver with several long-term bank deposits, I also benefit.

The interest rate on my latest investment of $20,000 with the ANZ Bank is 8.50 percent. This is for a six-month term that runs from January 5 to July 5, 2008.

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