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22 Feb 2013
Forex Flash: The RBNZ will not intervene - TDS
To the question of whether the RBNZ will intervene or not, Alvin Pontoh, Asia-Pac Macro Strategist at TD Securities, answers with an outright "No".
Mr. Pontoh notes: "RBNZ Governor Wheeler maintains that the RBNZ cannot fight “the strength of capital flows” that has pushed the Kiwi upwards. Even if the RBNZ intervenes, it is constrained to merely “smooth[ing] the peaks”. If this can be achieved with negligible cost through ‘open mouth operations’, then why intervene in the first place with precious few resources at hand?"
"Ultimately, Mr Wheeler’s preferred solution is lifting “productivity” to meet the lofty currency, as clearly manifest in the title of the speech: “Manufacturing decline not just a dollar story”. Rather than a signal of imminent currency intervention, it is a call on businesses to adapt to new circumstances and for the government to help facilitate this" Mr. Pontoh adds.
Mr. Pontoh notes: "RBNZ Governor Wheeler maintains that the RBNZ cannot fight “the strength of capital flows” that has pushed the Kiwi upwards. Even if the RBNZ intervenes, it is constrained to merely “smooth[ing] the peaks”. If this can be achieved with negligible cost through ‘open mouth operations’, then why intervene in the first place with precious few resources at hand?"
"Ultimately, Mr Wheeler’s preferred solution is lifting “productivity” to meet the lofty currency, as clearly manifest in the title of the speech: “Manufacturing decline not just a dollar story”. Rather than a signal of imminent currency intervention, it is a call on businesses to adapt to new circumstances and for the government to help facilitate this" Mr. Pontoh adds.