if a New Zealand milk exporter increases its payout to dairy farmers will NZD/USD appreciate?

@robert_sondreli - 4 months ago - Fundamental Analysis

I heard New Zealand Milk exporter - Fonterra, wants to increase payments to dairy farmers who meet a certain greenhouse emission standard. Will this move have any effect on the NZD/USD pair? Thanks for your inputs

@liam_calgary - 4 months ago

Fonterra is a really big dairy exporter in New Zealand & they account for about 25% of all exports leaving New Zealand.

So, if they indeed increase payout to dairy farms then investors will take it as a sign that the New Zealand economy is growing, and they will invest more in the New Zealand Dollar causing it to appreciate.

So, short answer is yes, if Fonterra increases payment to farmers, then the NZD/USD exchange rate will rise meaning it will cost more USD to buy 1 NZD