What’s going to happen to petrol when our currency corrects?

What’s going to happen to petrol when our currency corrects?

News came through today that banks will put their mortgage rates up again. This in itself will put pressure on the household finances (of those with mortgages), but there’s potentially a financial crocodile waiting to spring up from the murky financial water: the NZ dollar crashing. We’re at historic post-float highs against the US dollar. 81c! It wasn’t long ago that we were at 63c. Should the currency drop that far, our purchasing power will diminish hugely. In fact, we’ll be easily knocking on the door of $2/litre petrol.

Not so long ago we were appalled by one dollar per litre petrol – the nation was up in arms, then we got used to it. People will moan, then they’ll get used to it. Then $2.50 will be next psychological price point.

People will buy smaller cars if they can; there may be a glut of large second hand cars for ridiculously cheap money (perhaps so cheap that it’s worth buying them even though you’ll use more petrol – financially, that is, not for the environment’s sake).

We can’t expect the kiwi dollar to rise indefinitely, but no one can tell when it will fall, or by how much. Until then we’ll have to hope that something else brings oil prices down.

News came through today that banks will put their mortgage rates up again. This in itself will put pressure on the household finances (of those with mortgages), but there’s potentially a financial crocodile waiting to spring up from the murky financial water: the NZ dollar crashing. We’re at historic post-float highs against the US dollar. 81c! It wasn’t long ago that we were at 63c. Should the currency drop that far, our purchasing power will diminish hugely. In fact, we’ll be easily knocking on the door of $2/litre petrol.

Not so long ago we were appalled by one dollar per litre petrol – the nation was up in arms, then we got used to it. People will moan, then they’ll get used to it. Then $2.50 will be next psychological price point.

People will buy smaller cars if they can; there may be a glut of large second hand cars for ridiculously cheap money (perhaps so cheap that it’s worth buying them even though you’ll use more petrol – financially, that is, not for the environment’s sake).

We can’t expect the kiwi dollar to rise indefinitely, but no one can tell when it will fall, or by how much. Until then we’ll have to hope that something else brings oil prices down.

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