The decision by Allan Bollard and The Reserve Bank to drop the OCR base rate by 0.5% yesterday surprised economists and delighted exporters - allegedly.
From my own take, the decision was double-edged. With Pingar in offshore market expansion mode, our global NZ$ entry costs have just gone up. We will get fewer GBPs for our NZ$. The same is even more apparent when we look at the US entry point. The NZ$ has tanked against the US$ for several months now.
For established exporters, the benefits of the lower NZ dollar are clear. Not so, new exporters - at least short term. The key though is to think long term since this is where the long term revenues will come from. And I suspect that the NZ$ still has some way south to travel.
Short term pain, long term gain. A new reality in the business model.
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