BNZ’s thoughts on the comments yesterday from the Reserve Bank of New Zealand governor Wheeler (bolding is mine):
- The NZD stands out over the past 24 – hours as the weakest performing major currency.
- The initial catalyst for the decline was comments from RBNZ Governor, Wheeler , in a prepared speech.
- Ostensibly the speech was focused on the NZ dairy sector , but seemed a thinly veiled vehicle to reinforce the RBNZ ’ s views on the NZD.
- The market latched onto the following statement. “ If the currency remains high in the face of worsening fundamentals, such as a continued weakening in export prices, it would become more opportune for the Reserve bank to intervene in the currency market.”
- It has been a long time since the ‘ i ’ word has been used, and not one the Governor would use lightly.
- Still , it will be the Bank ’ s goal that by threatening such action it will not need to implement it
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I reckon that is a very good point indeed from BNZ. While the market ‘latched onto’ the intervention comment, such action is a long way off. There will be many more warnings before it actually happens, and if the market continues to latch onto warnings by selling off the NZD like it did yesterday, then it may not occur at all.
