Forum Archive Index - February 2004

["David & Jill Stevenson" <djstevo@quicksilver.net.nz>]

Allan,

 

        The Minister of Finance , Dr Michael Cullen , might be quite bright in his field with a degree in History or is it a Social Science?  However, wearing his other hat when commenting on Finance and Economic affairs , I am less confident as to his public statements .

        When questioned on the problems of a deteriorating  $US  he reassured with the statement to the effect that he had a couple of options available to him . When reminded of that reassurance at a later date ,and when NZ exporter`s terms  had worsened , he more or less admitted we (NZ er`s ) are more or less flotsam and jetsam

when push comes to shove.

        The $NZ has floated since March 1985 and since that date ,to the best of my knowledge, the RBNZ has not intervened directly in foreign exchange markets to influence the $NZ value . We have not the muscle to intervene in our destiny to any effect anyway. Unlike Japan who now favour their exporters heavily buying up the $US . If we want to get cute we could argue how unfair  philosophically intervention is in the market place. You can have an export driven economy with highly efficient producers outsmarting world competition in all aspects of their business. But once they get their goods on board "unfair "interventions by larger world powers negative all those skills when subjected to international money markets .However that is another subject.

 

        As I understand it the $NZ exchange rate is based on a relationship with a "basket "of international currencies with a heavy $US  weighting . With a greater emphasis on non US trading and greater attention to the Far Eastern countries and both NZ and Australia having similar difficulties with the $US ( Free trade Agreements between Australia and the US  do not produce significant advantages ,probably the reverse )   Given that position  -could the two ANZAC countries introduce some variable viz a viz the $US  in their exchange rate to counter undue impact of the $US decline on theur export economies ?. I realise oil imports are expressed in $US which  adds to  complications.

 

                           David