Reserve Bank of New Zealand Wheeler: New Zealand dollar significantly overvalued

• NZD significantly overvauled, lucky that it has fallen recently
• Will need to use all tools to keep inflation in check
• RBNZ has coped with strong NZD through low rates and some intervention
• Low inflation has allowed rates lower than would otherwise be the case
• Prepared to scale up intervention is looks like it will work
• RBNZ wants to diminish perception NZD is a one-way bet
• RBNZ concerned about the scale of household lending
• RBNZ concerned about high loan to valuation lending

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NZD/USD has been hit hard, down 40 points from around 0.8135 to sub-0.8100

The link to Wheeler’s speech:

Forces affecting the New Zealand economy and policy challenges around the exchange rate and the housing market

or

PDF version (206KB)