While I'm considered a “city slicker” my folks are very much cockies. So when the family convenes around holiday time the inevitable topic of conversation is always “the bloody dollar”.
I can tell that is what will be debated most as right now, the NZD has not been to these dizzying heights (against the USD and the Pound) for a while. Currently, the NZD will buy about US 0.73 and £0.45.
Being a predominantly export sector, what are farmers to do in times like this? Fonterra hedges aginst foreign exchange rev ups of the kind we're seeing now. The problem surfaces when levels of the current sort remain so for months on end. Fonterra's hedge is quite high enough to absorb the impact of a high NZD for too long.
When trends and key values aren't in your favour, you have to adapt. The alternative is to wait it out , but this often leads to more uncertainty and the odd curse word. In recent years, more farmers and people in general have realised you can't change the value of the dollar so why complain? If you can't beat 'em join 'em – that's right, buy foreign currency. This can be a jump into the unknown for many people, but farmers study the dollar closer than most. Farmers' livelihoods are tied to the rise and fall of the NZD.
Since you're more than likely watching it why not buy some foreign currency? Or... get into importing. Those who want to really turn the tide in their favour are flexible enough to begin importing businesses. The desktop PC or the laptop can connect you to world more places than t any time in history.
The point is, the NZD is where it is. There are far too many factors outside our control that determine the FX rates and therefore how much you get for a pound of meat or a kilogram of milksolids.
Whatever you do, don't do what my folks did – find a reason not to buy foreign currency only to lament after the rates dropped from US 0.78 to 0.55 (about a 30% increase in the value of your dollars).
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