RBNZ's Wheeler says aware of foreign central banks and sovereign wealth funds buying NZ govt bonds and pushing up NZ$
Reserve Bank Governor Graeme Wheeler has told Parliament's Finance and Expenditure select committee there has been significant buying of New Zealand dollars to buy New Zealand government bonds by foreign central banks and foreign sovereign wealth funds.
Wheeler also said he personally saw the New Zealand dollar as 10% to 15% overvalued and he was concerned that money printing by foreign central banks was pumping up asset bubbles in bond and other markets.
Wheeler said central banks in Asia and Europe, plus sovereign wealth funds investing in New Zealand government bonds were worsening the overvaluation of the dollar. He said he didn't want to see house prices keep rising at current rates, which was why the Reserve Bank was looking at macro-prudential tools.
He also suggested the market had been looking for a "more hawkish Monetary Policy Statement and had to adjust their positions." This morning's fall in the dollar was a "a good thing."
(Updated with additional detail).
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.