Kiwi set to surpass Aussie dollar in value

They tussle over cricket, rugby, movie stars and even a fluffy meringue dessert they call Pavlova, which both countries claim as their own.

Now the rivalry between New Zealand and Australia extends to a new arena — their currencies.

The kiwi, as the New Zealand dollar is called, is poised to surpass the Aussie dollar in value for the first time since the currencies were freely traded on international markets in the early 1980s. It was trading above 99 Aussie cents Wednesday and has been flirting with parity since last week.

Currency traders were predicting the kiwi would break above one Aussie dollar Thursday or soon thereafter.

China’s slowing growth is playing a role in this reversal, as are higher New Zealand interest rates. Weaker Chinese demand for Australia’s iron ore is depressing iron prices and the Aussie dollar relative to other currencies.

In broad terms, the change indicates that New Zealand’s economy is outperforming its Australian counterpart — something many New Zealanders are eager to celebrate, especially after losing the Cricket World Cup final to Australia last month.

“Our dollar is more than a currency,” wrote broadcaster Mike Hosking in an online opinion piece. “It’s an accumulation of what we’ve built, of what we offer the world, of how the world sees us. It’s our fiscal calling card, and at buck- for- buck it’s a platinum card with no limit, accepted wherever we go.”

Indeed New Zealand’s economy has been growing faster than Australia’s and its unemployment rate is lower, factors which have helped halt an exodus of New Zealanders flocking to Australia for better job opportunities. Australians aren’t so happy. “As Australia grapples with sinking commodity prices, sluggish consumer spending, lacklustre business investment, and an unstable political environment, New Zealand can boast of almost boomtime conditions,” Mark Mulligan at the Sydney Morning Herald newspaper wrote in a piece titled Currency World Cup.

Still, Australia has outperformed its neighbour over the long run. Australia has 24 million residents, five times as many as New Zealand, and often overshadows its neighbour in sports, business and international affairs.