Problems relating to Trade and Investment on New Zealand

12. Exchange controls
Issue	Issue details	Requests	Reference

(1) Exchange Instability/NZ$ Appreciation

- Export sales and revenue is largely affected by fluctuations in the foreign exchange. Recently, NZD has maintained strength more than ever before against USD, including also Japanese Yen.
- A large margin of foreign exchange fluctuations makes sales and profit control difficult.
- Radical exchange fluctuations prevail. As it stands, member firm's subsidiary (MFS) benefits from exchange gain on a direct export transaction in yen. Nevertheless, negotiation for raise in price is difficult. In a transaction between related parties, the prevailing Yen depreciation enables MFS to offer special prices to its customers. However, MFS runs on a thin margin, so that if the exchange rate swings toward appreciation of Yen, it will instantly show operational loss: such is the severity of the fluctuation band.

- Stability in foreign exchange is more desirable to enterprises.
- It is requested that GOP takes step to:
-- stablise foreign exchange fluctuations, and
-- holds the fluctuation band within a few percents in 6-months.

- Finance Related Legislation

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