1  Last week, the Government Statistician announced that the gross overseas debt of New Zealand banks and corporates had risen by $ billion during the year to 31 March 1998, to reach a total of $ billion. Of this increase, it was stated that $ billion was on account of the increase in the New Zealand dollar value of foreign currency debt.
It was also noted, however, that the figures took no account of ‘hedging or other financial derivatives used by companies to offset potential foreign currency risk.’ The significance of this note has almost certainly been missed by many commentators, because it is quite clear that all banks, and I suspect most corporates, hedge their foreign-currency denominated liabilities in full or in substantial part.