Reserve Bank of New Zealand has its policy setting meeting later this week, which might be interesting. Last few weeks has witnessed increased strength on New Zealand dollar, in tandem with AUD. This is a cause for concern to RBNZ, which is not happy with lofty levels of the Kiwi. For some time now officials have been quietly mentioning more rate cuts, in effort to slow down, or stop NZD appreciation. They even put the option of intervention on the table, just like Canada have been threatening to do.
To date nothing came of BoC innuendos, and we have to wonder, what a rate cut would accomplish for RBNZ. Interest is already very low, and currencies are not driven by rate differentials. Observers point out that current NZD rise is connected to trade flow rather than monetary policy of any one country. Also, central bank might have little influence over given currency, if it is very popular, as is the case with New Zealand Dollar at the moment, or Aussie, too. However, looking a little closer at the details, perhaps, after all, we are dealing once again with the carry trade.
More about
New Zealand Dollar 
|
09-08-09, 06:42 PM
Linear Mode
