Following on from my recent blog about Auckland house prices, I’ve been playing with Trifacta and Qlik Sense, this time with export data, looking at how the New Zealand Dollar (NZD) trends against New Zealand exports. Before diving into the export figures, lets take a look at how the NZD is trending against other currencies, then we’ll explore the overall export trends and how currency changes impact demand.
Question – how is the $NZD trending against other currencies?
The Australian Dollar (AUD), Euro and Great British Pound (GBP) have followed similar trends, with the strength of the NZ dollar lowering in the second quarter of 2015, only seeing a slight increase in the last month. The value of the NZD against China’s Yuan (CNY) and the United States Dollar (USD) have followed a different trend.
When accounting for the value difference we can see that both of them follow a very similar line. As we have two distinct patterns, we’ll break down our analysis into the trends for CNY representing both CNY and USD and separately for AUD which will be representative of GBP and EUR trends too.
Question – how have New Zealand exports been performing?
There has been a fall in export value from Oct 2014 to Oct 2015, a drop of $65 million NZD for Australian exports, but we see a rise in value to China, the US and the UK.
As our exports to Australia reduce, our exports to other countries are growing. Overall there’s been a drop in export value of just under $1.9 Billion NZD from 2014 to this year which may have contributed to the reduced strength of the NZ dollar, although we’ve still got a couple of months to go. It’ll be interesting to see how things change in 2016 and whether the growing Chinese and US trade markets become more dominant or whether Australia will remember their love for awesome Kiwi products!
Question – is the lower value of the NZD matched by a lower value of exports or does demand go up as the costs become cheaper?
I spent quite a bit a time looking at the trends of the top 10 export groups and perceived a correlation between a few. Fruit, meat and machinery seem to increase in value as the NZD weakens against the Chinese Yuan and United States Dollar, suggesting as our goods get cheaper, the demand goes up. I didn’t have the data available to see if activity in these markets was the reason for this increase, but there does seem to be a pattern. It’s a similar story for wine too and to a lesser extent ‘logs, wood and wood articles’.
This isn’t true across the board; ‘milk powder, butter and cheese’ seems to reduce in value as the strength of the dollar weakens. While I’d need more data to confirm, it’s suggestive that the NZD strength is dependent on these exports. Not surprisingly, this is our biggest commodity and any drop in export values is likely to have a direct correlation on the value of the NZD. Since March 2014 to October 2015 there’s been a $418m drop in monthly value just for this product category.
As the AUD, GBP and EUR follow a similar trend I’ve used the Australian Dollar, as it’s our biggest trader for exports, to simplify the representation. Unlike the CNY and USD variations, I couldn’t find a direct correlation between the trends for these currencies against export values suggesting other factors are causing fluctuations for these markets.
It’s been fun looking through the data and exploring some new tools along the way, if you’re interested in how I put these together look out for my ‘behind the scenes’ blog coming soon. I’ve got a few more weeks exploring NZ’s Open Data sets and so far have been impressed with the wide range, but there could always be more, some agencies seem to be much more open than others … Hope to see a lot more in the future!
Before I go, just want to say a big thank you to Statistics New Zealand for providing this data and for all of the great data they make available.
Keep exploring! Daniel.
Oanda (Currency Rates)