Forum Archive Index - September 2001

["G Stolwyk" <stolwyk@wave.co.nz>]

From my post of yesterday, 18 September 2001: " US Stockexchange opening on Monday ", time 10.04. Quote:  

 

" The question now is: Has Brash made a tax cut yet as nearly every one else has done!

 

Or does he want to wait again till the signs of deterioration start showing and by then the damage is done.

 

Contrary to what some people may think, this country has not been blessed by the policies of the Reserve Bank in the past".

---

Today: Don Brash made un unscheduled 0.5% cut this morning and the Cash rate has fallen from 5.75 % to 5.25%.

 

NZ is not in a very good financial position and too great a cut would have resulted in a much lower exchange rate.

 

Commentators have referred to much lower metal prices and the Australian dollar has weakened.

 

 Although both the NZ and Aus. currencies have declined against the US dollar, we did firm up a bit against the Aus. dollar before the Announcement.

 

As to the strength of the US dollar, the major countries made a cut at the same time, therefore any expected fall of the US dollar could not be contributed to a rate cut.

 

An overriding factor is that these major countries have pledged to defend the $US against speculators.

 

Therefore, depositors or holders of US treasury bonds would have decided against a greater withdrawal and hence prevented a larger fall by the $US.  

 

This is an important support in the trading of US  and world securities.

 

Without this and other important supports discussed previously, the world markets could have fallen further.

 

Gerry