Reserve Bank $521m selloff to drive down dollar 'logical' – PM
RBNZ confirming speculation it has been intervening in currency | PM says "Goldilocks level" is 65c.
Currency reserves data released by the Reserve Bank at 3pm today confirmed speculation it intervened in August to lower the New Zealand dollar.
The central bank sold $NZ521 million last month in an effect to curb what Reserve Bank Governor Graeme Wheeler last week described as the kiwi’s "unjustified and unsustainable" strength.
Earlier today Prime Minister John Key stated he believes the New Zealand dollar is currently over-valued and that its fair value is around 65 US cents.
"At the levels we're at – 78 odd cents – it’s at quite high levels,” Mr Key told reporters at Parliament. “It's worth remembering the New Zealand dollar floated at roughly 44 US cents so we're a long way from that.”
Mr Key went on to say he thought “the Goldilocks rate – not to high, not too low, just about right – I don't know, 65 US cents, maybe – lower than it is today.”
Mr Key noted he didn’t believe currency intervention is effective long term but “what does work ... is targeted interventions at times where the currency is either over-performing or under-performing”.
The Prime Minister, who was announcing a confidence and supply arrangement with ACT’s David Seymour, said he didn’t know whether the Reserve Bank had intervened.
However, he did say he agreed with Mr Wheeler’s prognosis.
"I happen to actually support the view that the Governor has that the exchange rate is over-valued, so if they have intervened, that would be a matter for them, but it would seem fairly logical," Mr Key said.
Nick Grant
Mon, 29 Sep 2014
Mon, 29 Sep 2014
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Reserve Bank $521m selloff to drive down dollar 'logical' – PM
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