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New Zealand Trade Deficit Narrows as Imports Dwindle
Tuesday, 06 January 2009 23:19:49 GMT  |  Ilya Spivak, Currency Analyst
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New Zealand’s Trade Balance report showed the external deficit shrank to -NZ$5.16 billion in the year to November as annualized imports added a meager 5.2%, the lowest in at least 6 months and less than half of October’s 16.4%. Although it is clear that global economic slowdown it taking a toll on demand both domestically and overseas (exports added just 9.4%), the decline in inbound shipments looks to be outpacing its outbound counterpart as the rapidly depreciating New Zealand dollar dwarfs domestic purchasing power while making the smaller antipode’s products cheaper for foreign buyers. The Kiwi lost a whopping -24.5% in the year to November against an average of seven top currencies. Looking ahead, more of the same is likely as additional interest rate cuts from the Reserve Bank of New Zealand spark further depreciation. Traders are currently pricing in 1.25% in additional easing over the next 12 months.

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