The New Zealand dollar has ended the week on a high.
In fact, final trading in New York today saw the Kiwi dollar at 97.53 AUc a record post-float high.
And it ended at 69.93 euro cents, also a record post-float high.
Both represent the highest the New Zealand dollar has traded with these currencies since March 1985 when when our currency was freely floated.
It rose against other main pairs as well, although no other set was an all-time record.
It ended the week at 75.63 USc, 90.8 Japanese yen, 4.69 Chinese renminbi, and 50.6 British pence.
The rise will concern the Reserve Bank who have repeatedly claimed our currency is unjustifiably high.
But they are unlikely to try and talk it down because of their unfortunate recent experience; whenever they try, it seems to go up.
This is what they said on March 12, 2-015 when they issued their latest Monetary Policy Statement:
On a trade-weighted basis, the New Zealand dollar remains unjustifiably high and unsustainable in terms of New Zealand’s long-term economic fundamentals. A substantial downward correction in the real exchange rate is needed to put New Zealand’s external accounts on a more sustainable footing.
Since then, the TWI-5 has risen +2.6%.
And since then, both our Current Account data for the December quarter has been released, and the GDP data for the same period. Neither showed any special currency-related concerns.
Th RBNZ are in a tough spot. They do not have the resources to sustain any market intervention. And the liquidity policies of many major economies are working to lower their values, especially from China, Japan and the Euro Zone.
Other major currencies are suffering from elevated levels as well, including the US dollar, and they also seem unable to stem their rises. What chance does the RBNZ have?
Our high currency is having little negative impact on our economy. Economic growth is strong and it looks like it is staying above trend for all of 2015. Employment levels are strong. And key industries seem to be able to sell their products. While local manufacturers would like a lower exchange rate, factory confidence levels as measured by the PMI are high by world standards and the sub-indexes for output are especially strong.
Neither does the tourism industry appear to be suffering because of the 'high dollar' - a regular complaint from them in previous business cycles.
And the fast-growing education sector which could also potentially be impacted by a high currency is showing no ill-effects at all.
On the flip-side, a high currency makes our imports less expensive and generally these lower purchase costs flow though to consumers. While wage rises may be modest, inflation is very low (including for food costs) and that means 'real wages' are rising.
Some may ask, What's not to like ?
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