Dollar dip warning
Low Kiwi dollar could hit online sales in leadup to Christmas.
Kiwi shoppers looking for online bargains risk paying extra this Christmas as the low exchange rate pushes up the cost of overseas purchases.
But it could also spell good news for the New Zealand retail sector with bricks and mortar stores that have already bought festive stock at a better exchange rate able to offer sharper deals.
Since June, the NZ dollar has fallen from 72 cents to 64 cents relative to the US dollar, before recovering to 65 cents.
This has pushed up the price of goods for sale at online stores such as Amazon or Apple, where purchases are made in US dollars.
University of Waikato professor of finance Stewart Locke warned people buying products from these businesses to check their actual cost before committing and to look at where the item was coming from.
The exchange rate fall was a result of the US dollar strengthening against other currencies around the world rather than New Zealand’s falling and it had remained relatively unchanged against other currencies such as the pound or euro.
As a result, it was not a given that all overseas imports would be affected, he said.
‘‘Buying things overseas, the US dollar price is going to make it more expensive for us, but for those in countries that are producing the products, the price they are going to get in pounds is going to be a lot more so their prices are falling. ‘‘
Foreign currencies were also falling against the US dollar, alongside the kiwi.
‘‘We might not be that badly off. American cars might go up in price, but European cars may not.’’
Hamilton Central Business Association general manager Vanessa Williams said feedback from retailers suggested the effect of the low dollar was yet to hit because retailers paid for their Christmas stock in the period prior to the dollar falling.
‘‘The impact of the low dollar really hadn’t been felt at the time they did that and that price is locked in for Christmas,’’ she said.
There were also differing impacts depending on whether a
‘‘Buying things overseas, the US dollar price is going to make it more expensive for us.’’
Stewart Locke, professor of finance, Waikato University
product had a high or low margin.
‘‘Obviously no one wants a price increase prior to Christmas and certainly the ones I have spoken to said they wouldn’t have to look at that scenario. It will be in the New Year where that impact will possibly be seen,’’ she said.
Graham Boswell, from Hamilton-based photography store Snapshot, said it was possible that it could drive people back to retail stores if they realise they have to pay more buying online.
‘‘I think that would be sensible because if you buy anything offshore the current exchange rate will come back to you. If I was a smart-thinking Kiwi, I would definitely be buying everything from a New Zealand supplier.’’
He said the dollar’s impact was starting to be seen on some of their items.
‘‘I know the exchange rate is making imports dearer but we live in a competitive industry like all industries and anything can be bought with a click of a mouse offshore.
‘‘Our suppliers and ourselves are mindful that we have to keep product prices as sensible as we can.’’
Boswell said they locked in their Christmas prices two months ago, but some of his suppliers have edged up the cost of some goods that are not price sensitive.
However, those business owners who locked in stock when the exchange rate was higher should have a good Christmas.
‘‘It’s definitely having a bearing because our margin isn’t a high margin with our products. It’s very thin and every few per cent helps.’’