New Zealand dollar falls to lowest since 2020 as pound value hits currencies

A local construction supplier says the price of steel jumped 10 percent over the weekend, following a sharp drop in the value of the New Zealand dollar.

The NZ dollar had fallen more than 3 percent against the US greenback since Friday to hit 52.26 US cents - a low last seen during the March lockdown in 2020.

It was triggered by the announcement of Britain's new "mini-budget" which promises to cut taxes but increase borrowing.

The soundness of the plan upset investors, who aggressively sold out of the pound driving it to an all-time low.

The sell-down reverberated around the financial system, impacting currencies across the board, including the NZ dollar.

Local steel supplier Tiger Saw, which imports products for the domestic market, saw the effects of the dollar's slide first hand.

Tiger Saw managing director Brent Curnow said the sharp decline had been costly for its business and its customers.

"The price went up over the weekend for steel by 10 percent. This relates to the exchange rates for US dollars because all products that's imported for steel is purchased in US currency, so it has had a dramatic effect."

The higher costs would be passed on right throughout the building supply chain, meaning it was the end consumer who would ultimately pay, Curnow said.

The higher costs were also curbing demand for residential builds, but commercial construction activity was in a better position to withstand the price shocks, he said.

The recent sell-off in the NZ dollar against the greenback was not isolated.

Currencies around the world have been hammered this year by the aggressive tightening of monetary policy by the world's most important central bank, the US Federal Reserve.