The slumping US dollar - which has hit record lows around the world since the US Federal Reserve announced a $US600 billion ($NZ756 billion) package this week - is already causing some concerns for Otago businesses.
Following the Fed announcement, the US dollar slumped against all currencies around the world on Thursday, hitting a 28-year low against the Australian dollar, which hit $US1.01, and a more than nine-month low against the euro.
Against the yen, the greenback eased to 80.68, close to its 1995 postwar record low of 79.75, while the New Zealand dollar hit a 30-month high of US79.75c early yesterday before settling back to trade around $US79.3c.
Equity markets in the United States and Europe gained ground, while oil and gold also rose in value.
Freight company DCB International director Mark Willis said local manufacturers and the lumber industry were suffering with the strengthening New Zealand dollar and "there were exporters bleeding on the carpet".
"There is talk of the New Zealand dollar going through $US85c in the New Year which has many very concerned," Mr Willis said.
While the appreciating kiwi had resulted in a boost to imports of stock and machinery for upgrades, with New Zealand being an export-led economy, manufacturers would be "more comfortable" if the kiwi was in the low to mid-US70s.
"Being back into the US60s range is some way off," he said.
While exporters to Australia were making currency gains, they were exposed to the US dollar because shipping transactions were in that currency.
Despite increasing costs, shipping space remained full and forward orders for space remained "tight", Mr Willis said.
Scott Technology, whose overseas orders for manufactured production lines are often contracted in US currency, had withstood wild fluctuations for two years now, but to the detriment of its bottom-line at times.
Yesterday, general manager Chris Hopkins said less than 50% of work at present was in US dollars, with the majority of work a mix of either Australian dollars or euros.
"We're looking at Australia a bit closer now, having gained some traction in [robotic] meat processing sales and also in some of our mining products," Mr Hopkins said.
The fluctuating strength of the kiwi was making planning and quoting "a bit of a nightmare and frustrating" at times, highlighting that a quote made in US dollars four weeks ago could lose 10% in value over that period because of the volatility.
"It affects our ability to be competitive internationally, especially with suppliers from Europe" who were facing less currency volatility or gains, Mr Hopkins said.
Meat processor Silver Fern Farms highlighted the effects of currency in a supplier update yesterday.
"Both announcements [the 25-point rise in the Australian cash rate and Federal Reserve announcement] were bullish for the New Zealand dollar, which has now hit two-and-a-half-year highs against the greenback," the company said.
Asian markets had been supportive of prices, by the appreciation of their respective currencies against the US dollar, but for venison going to Europe the euro was above the 10-year average and was reducing returns.
"[Asian] customers remain cautious given the high in-market prices and volatility surrounding currency movements," Silver Fern said.
