WELLINGTON, Feb. 20 (Xinhua) -- The Reserve Bank of New Zealand (RBNZ) is ready to intervene to lower the country's exchange rate when circumstances are right, governor Graeme Wheeler said Wednesday,
Wheeler said the New Zealand dollar was significantly overvalued in terms of economic fundamentals, and this was a headwind for some in the manufacturing sector, but there were no simple solutions available to the RBNZ.
"Some of the strength in our real exchange rate is due to global financial imbalances and the weakness of the U.S. dollar in particular," Wheeler said in a published speech to the New Zealand Manufacturers and Exporters Association in Auckland.
Near-zero interest rates and quantitative easing by other central banks had pushed up currencies like the New Zealand dollar, and domestically, New Zealand's poor savings record was also to blame.
Wheeler said the RBNZ stood ready to intervene in the currency when circumstances were right and to use the Official Cash Rate as required.
It is also investigating the use of macro-prudential tools to support monetary policy.
While commentators had suggested a wide range of alternative policy responses to lower the New Zealand dollar, there were no quick fixes available to the RBNZ.
"Our economic challenges are different from the U.S., Euro area, and Japan, and quantitative easing would increase inflation, raise inflation expectations, stimulate asset prices, and lead eventually to higher interest rates," he said.
"Efforts to improve the level and productivity of capital that labor works with, to reinforce ongoing fiscal adjustment, to re- examine the factors that diminish and distort the incentives to save and invest, and to reduce dependence on the savings of others have to be a major part of the solution."
Employees run half-naked for not meeting sales quotas
Feedback
RSS
