News that the Reserve Bank yesterday intervened in the currency market and sold a bunch of NZ dollars in order to bring down the “unjustifiably high” level of the Kiwi dollar.
I’m not entirely sure that the move will have any real effect beyond a very short term one. Once again the RBNZ are constrained in what the are able to do (raise the OCR and sell some cash reserves) in order to their statutory (and myopic) requirement to keep inflation in check.
Exporters need the dollar to be around 60cents against the US. Moves like this may make a one or two cent difference but not sufficient to really make a marked difference – unless of course it creates a market reaction……..
