Joyce says dollar could hit parity

Economic Development Minister Steven Joyce says that while the closure of one paper machine at the Kawerau mill was a consequence of the fact that newsprint making was a “declining industry”.

Speaking this weekend on TV3’s “The Nation” he rejected claims from the mill owners, Norske Skog, that the high New Zealand dollar was a factor in the closure.

Asked then if he agreed with Prime Minister John Key earlier in the year that above 73 cents to the American dollar it was “very difficult” for New Zealand manufacturers, Mr Joyce said it was challenging.

“There's no doubt about that, and there's never been an exporter that doesn’t want to lower exchange rate, no matter what level” he said.

Mr Joyce said that the dollar “may” hit parity with the US dollar.

“But that'll be because the US is completely in the toilet,” he said.

“Ultimately it's market fundamentals.

“And so ultimately nobody's going to bid the New Zealand dollar beyond what they consider it should be at. 

“Now even if it bounced through say for example the quantitative easing that's coming through at the moment, it will come back again. 
“Because fundamentally the value of the New Zealand dollar is determined by what the world believes is the future of the New Zealand economy, and if they bid it up too high, then they will look at it and say well actually we've bid it up too high, and we'll bid it down again.”

Mr Joyce said the private members bill being introduced by Winston Peters to alter the Reserve Bank’s objectives was a “snake oil solution that would achieve nothing.” 16/09/12