Australia, as the country's largest trading partner, has an almost equal flow of imports and exports and the downward shift from A83c to A79.07c early yesterday will cut both ways for exporters and importers, BNZ senior economist Craig Ebert said when contacted yesterday.
"This [fall] is happening at a time we need currency [exchange rates] to help and assist and act as a shock absorber," Mr Ebert said.
However, he was also cautionary about the downward currency shift, noting there was "some perplexity" surrounding the strength of the Australian dollar, which was being maintained by perceptions China's economy was being reported as "stabilising" and "picking up" - but that message was being delivered from ambiguous data.
"Australia is in a China-play because of its wealth of minerals. If China picks up, so will Australia," he said.
ABN Amro Craigs broker Peter McIntyre said while the weakening US dollar was having an effect on the Australian dollar strength, the New Zealand dollar was weakening with the likelihood of the Reserve Bank of New Zealand making a larger than expected cut to the interest-driving official cash rate at the end of the month - a sentiment shared by Mr Ebert.
Mr Ebert emphasised China data, such as gross domestic product reporting, was announced annually, not quarterly.
While "real" annual GDP had fallen from around 8.4% to 6.1%, he said "nominal" GDP figures for the same period indicated a more dramatic fall from 15.1% to 3.5%.
"The region has decelerated quite rapidly and China is in the midst of deflation [falling demand pushing prices down ]. It will be putting further pressure on profits and prompting discounting," Mr Ebert said.
He said there was no shortage of "counter arguments" surrounding the state of China's economy, citing one recent ambiguity in a respected China analyst pre-dicting its residential property market could halve in the near future.
Mr McIntyre said the interest rate swap market, the key determinate of mortgage rates, was easing downward as more people "ran to fix their mortgages" at the lower floating rates on offer in New Zealand, which was traditionally 80% fixed and 20% floating.
"Weaker than expected inflation data [released last Friday] means it could be more appealing for the Reserve Bank to cut rates further than anticipated," Mr McIntyre said.
The 3% Australian rate is at its lowest since the 1960s and a rate cut below New Zealand's present 3% would be the first time in decades our rate was below Australia's.
