2. 18/08/2015 Agricultural Economics – Exchange Rates AS90651 Explain how market forces affect supply and demand of primary products (4 external credits)

3. 18/08/2015 Summary New Zealand is the furthermost country from the rest of the world ( i.e. the Northern Hemisphere) New Zealand is the furthermost country from the rest of the world ( i.e. the Northern Hemisphere) And is quite small And is quite small This means that as a country, our economy depends on the needs and wants of other countries This means that as a country, our economy depends on the needs and wants of other countries

4. 18/08/2015 A High New Zealand Dollar When the New Zealand dollar is valued highly against the US dollar then: When the New Zealand dollar is valued highly against the US dollar then: Imports are cheaper into the country. This is because we can get more for our money. Imports are cheaper into the country. This is because we can get more for our money. Exporters don’t get as much money as the people who buy their products can not buy as much, so they don’t. Exporters don’t get as much money as the people who buy their products can not buy as much, so they don’t.

5. 18/08/2015 What this means for farmers Fertiliser, tractors and other machinery imported into the country cost less so they could buy more Fertiliser, tractors and other machinery imported into the country cost less so they could buy more They don’t make as much money as their products (wool etc) aren’t worth as much They don’t make as much money as their products (wool etc) aren’t worth as much Overall farmers prefer to have a low NZ dollar Overall farmers prefer to have a low NZ dollar

6. 18/08/2015 A Low New Zealand Dollar When the New Zealand dollar is valued low against the US dollar then: When the New Zealand dollar is valued low against the US dollar then: Imports are more expensive to get into the country. This is because we get less for our money. Imports are more expensive to get into the country. This is because we get less for our money. Exporters earn more as the people who buy their products can buy more, so they do. Exporters earn more as the people who buy their products can buy more, so they do.

7. 18/08/2015 What this all means Yesterday the $1NZ was worth $0.615US Yesterday the $1NZ was worth $0.615US A few months ago $1NZ was worth $0.71US A few months ago $1NZ was worth $0.71US This is good for farmers as their products earn more money This is good for farmers as their products earn more moneyWorksheets

8. $NZ vs $US over last 10 years 18/08/2015