Working with Allan Bollard

This morning, the New Zealand Reserve Bank increased its official interest rate to 7.75%.

Economists with far greater insight than I can offer, will no doubt already be advising their clients as to the likely impact on home-owners, small businesses and the export sector. Specifically, I would expect them to be looking at the impact on short to medium term exchange rates and their effect on New Zealand's global competitiveness.

Being dependent on most of my own income from offshore clients, a high NZ dollar hurts The WH Consultancy. By outsourcing much of our development work to HBI Software in Bangalore however, we are able to partially hedge the impact on the business. That's because the reduced return on inbound revenues caused by the high NZ dollar is matched by a reduced level of outbound costs.

My own view is that NZ business has to get used to a high NZ dollar for some time to come. When the correction does come, it will no doubt be steep. But when?

'Thinking Global' is normally associated with 'Thinking Export'. My own conviction is that thinking global means looking at the whole business process including supply chain, HR and funding, as well as of course sales. The development of a global business strategy can help begin to address the negatives that a highly valued dollar brings. It helps make business less NZ-centric and more able to adapt to the pressures operating in a small economy can bring.