New Zealand Commodity Price Report Hints Currency Gains Threaten Recovery

New Zealand’s ANZ Commodity Price Index revealed that world prices for the country’s top exports rose for the third consecutive month in May, adding 2.7% from the previous month. Prices for dairy, New Zealand’s top export commodity, rose 5% to register the biggest gain in at least 7 months. Most critically, prices measured in terms of the New Zealand Dollar fell for the third consecutive month, the increase in global prices is accounted for by a stronger local currency rather than improved overseas demand. A stronger currency will weigh on exports (which account for 30% of total output) and hamper the economy’s ability to recover, making New Zealand’s goods comparatively less competitive.