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High NZ dollar in for volatile time as Americans, Europeans print money, PM Key says; Govt's view is it can't alter the level of the currency, he says

High NZ dollar in for volatile time as Americans, Europeans print money, PM Key says; Govt's view is it can't alter the level of the currency, he says

By Alex Tarrant

The New Zealand dollar faces a volatile time as quantitative easing programmes run by central banks in the US and Europe devalue the major global currencies, which have so far kept the New Zealand dollar high around 80 US cents, Prime Minister John Key says.

It was the government's view that it could not alter the exchange rate, which in a freely floating market was subject to the market's interpretation, he said.

Speaking to media in Wellington on Wednesday afternoon, Key said a New Zealand dollar around 80 US cents was considered by the government as putting pressure on Kiwi exporters. On the other hand, it meant imports were cheaper.

Meanwhile, there were unlikely to be any significant changes to the new Policy Targets Agreement incoming Reserve Bank Governor Graeme Wheeler who is set to sign with the Finance Minister before taking over at the Bank on September 26, he said.

Volatile outlook for NZ$

There were lots of factors moving the New Zealand dollar around at the moment, Key said.

"The reality is the New Zealand exchange rate's quite high at the moment, and it's been subject to significant speculation [about where it's headed]," he said.

"It's also true that you're seeing quite a lot of weakness in the US currency and the euro as a result of their quantitative easing programmes. So it is probably going to be quite a volatile time for the New Zealand dollar."

Markets are currently waiting to see whether the US Federal Reserve will engage in a third round of quantitative easing (QE) - where a central bank creates new money to buy government or private sector bonds in an attempt to inject new money into the economy - while the Bank of England just extended its QE programme and the European Central Bank has what many consider as a QE programme through its long-term refinancing operations.

Asked whether the government viewed the currency as overvalued, Key replied:

"Our view has been that at above 80 cents against the US it puts pressure on our exporters. There's a counter to that - it obviously makes imported goods cheaper, and the imported components of exported goods cheaper. But it certainly puts pressure on some exporters. There's no question about that."

While the government could directly control things like public spending and the way laws like the Resource Management Act were applied, "what we can't do is alter the exchange rate," Key said.

"That's really something which, in a freely floating market is subject to the market's interpretation, and subject to very extreme conditions, it's not the government's view that we should intervene," he said.

Asked whether there might be more reference to the currency in the new Policy Targets Agreement Wheeler would sign with the Minister of Finance before taking over at the Bank on September 26, Key said Finance Minister Bill English had indicated to him that there were "unlikely to be significant changes" in the new PTA.

Meanwhile, Key said it was not his job to comment on whether the government considered the Official Cash Rate was at an appropriate level currently relative to projections of where the economy was headed.

"New Zealand has an OCR which is higher than in other countries, so that's been noted by both S&P and others as an advantage for New Zealand because it just indicates we've got room to move if we needed to, just like the health of our general [public] debt levels is low.," he said.

"They're just known advantages to New Zealand. But whether [the OCR] should go up or down or what it should do, that's a matter for the Reserve Bank Governor."

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48 Comments

Don't you dare suck for this Alex ....this man is a lying Mahfo, You can bet your ass this piece of dung is capitalising on the situation as it is, while using the rate of inflation as an excuse to keep the Status Quo.....
 This man has nothing but contempt  for you.... me ......and the wider population, when for F*%ks sake are any of you going to step up and challenge his conclusions , which BTW are not conclusions but directives.
Geesus the gaul of the man is getting me upset.....
 Now at least you know why Bollard  is a Muppet puppet....he's got the long arm of the P.M. right up him. 

I think you better check the IP address for Count Christov while you are at it Alex, someone has stolen our normally peaceable and lovable Count.

No Scarfo....tis me indeed...! I have had a gutsfull of this turd in an Armani, the man is the epitome of disingenuity.......yet his words command a reverence within the media.
 You don't need to be wise and somewhat academic, you need 50mill and all in sundry think your the next coming. 

A Schmuck perhaps?
 
Alas some people I know thought this guy was going to be our saviour after the Herr Clark years. Poor deluded souls. I don't share you level of frustration over the man Count, as I expected what we have got. However I do dispair for the sheep that put their faith in him. or any of the other clowns. Freeloaders the lot of them.
 
Much as things seem to be brewing again for trouble in the markets, I don't expect much change from the status quo until we see civil unrest. I can't work out why it has not yet occurred somewhere amongst the piigs.

Christov: Here is a repeat of a question from a year ago .. which you never answered .. mirror mirror on the wall who could lead us best of all? Who would you vote for now?

iconoclast...I so wish you could expose Key as easily as you expose me, for being bereft of idea as to the who component.....I am at a loss.
I would however support a repeat a Bob Jones initiative taken to depower Muldoon, while i have no respect for disingenuity of that level ,I understand it's being deemed a necessary solution to what was percieved as a Cult of personality rule unopposed in measure.
 If  Rowling's opposition was weak, ( and it was) what the hell would you call this lot....?
As much as we all found Cunliffe ( don't call me Cunnie) a smug individual, tinged with arrogance.....I believe he would have taken Key on...challenged him at every opportunity,fought smug with smug, so I think the Red Brigade made a real error of judgement there, Cunnies lost interest , clocks in, picks up the public cheque, nuff said.
The point to the ramble is that when things go unchallenged as they appear to , the lines of morality become blurred, you know, an Im here to keep you honest thing.
 The overview to me is that Key's cronies stretch well beyond his own party, Banks is a given, defo Pita S, probably wasshername too, Peter,(oh God John I love it, except the gay thingy) Dunne, and I'm having real doubts about  David( why not share it) Shearer ....couldn't think of his name for a mo ,how bad is that..!
 And so here we are at a new party emergence because we can no longer trust in those that promised under oath to serve the Public interest with honour and dilligence. 

I tried to warn you ..

I had dinner a few weeks back with a guy I find particularly intersting and entertaining. Ex RAF and British Airways and now into his 9th decade. The sort of guy that reads and knows a lot. Funny thing is he calls himself a fascist these days :-P

No denying that iconoclast.....

and the alternatives are what? Green's got 11%....I doubt that was because ppl suddenly found their green roots.....more like dis-enfranchised poor looking for more handouts...certianly if the stuff Ive seen written in blogs/facebook etc is anything to go by.
While I think its imbalanced the bigger issues the not least of which is good leadership and vision is non-existant.....but I guess if I went back 50 or 80 years and lived in that time I'd see the same thing.....
regards

Was in Auckland for the 4 weeks leading up to the election .. glued to the tv every night .. watching the mobile moustache .. what was noticeable was the absence of any debate and analysis of the two key wedge issues .. Labour's CGT and .. National's Asset Sales .. absolute silence .. the hot topic was a freakin teapot .. of all things .. was it a set up? .. the news media couldn't get enough of it .. analysed it to death .. for goodness sake .. if the peasants can be conned that easily they deserve what they get .. I still reckon the one person you need to lead is in your midst .. someone who has blotted his copy book .. no chance of a knighthood .. has no hope in hell of doing a lazarus and resurrecting his blemished reputation .. shoots from the lip .. says it as it really is .. combative  .. take no prisoners .. willing to take the necessary steps, regardless .. has no respect for sacred cows .. you know who I mean .. my opinion hasn't changed ..

If i read you right, iconoclast, "the boy who cried wolf "story has overcome his ability to reform the perception many now have of him.
Yes , a confrontational contender , savy enough to see the traps opening for him, but undone by his inability to show genuine contrition for his own conciet and power lust, all he ever had to do was apologise to his people for errors of judgement he knows full well he made.
Like him yes, him perhaps not, in fact a budding him is Hone, he may truly be showing the ability to lay his demons to rest with maturity and dignity.
 BTW....my friend...you are not him, are you..?, if so I take it all back, and will gladly take up a possie near Marks'y...and all hail.

Am I correct in summing up , that the general consensus here is that Jolly Kid is doing a pretty good job ? ..... fair enough ....
 
.... but then , I am temporarily residing in Oz , and JK looks extraordinarily competent compared to the Aussie politicians ......
 
No offense , but I wouldn't vote for JK , never have never will ... ... but if you guys are enamoured with him , that's OK by the Gummster ....

Yes GBH.......fair to say we just can't get enough of him.....it's a greed thing and I'm choking on the portions....ya scamp.

I was terribly disappointed that Jolly Kid & Wild Bill wasted the opportunity of the GFC , to get cracking on NZ's fiscal imbalances , to cut the WFF style pork , ring-fence property investing from tax minimisation ...... that sort of touch ....
 
..... but other than that , they seem friendly enough , and aren't threatening to mass medicate us all with folated bread , or put water restrictors in our shower heads , or to ban our beloved incandescent light-bulbs ....
 
A government which is mostly useless , but benign , is a pretty good thing for the populence ..... I mean , imagine being ruled by the overlord , Barack Obama !

Imagine GBH having to admit to people with a straight face you elected Mitt Romney....?
John Boy is anything but benign GBH, he has deliberated leaving the coffers full for the WFF and the like,as they'll need every penny to start paying their corporatised power bills and so on.......
Shrink the machine...? I don't see that happening.

...... the state must at all costs , protect the privileges of those who vote for them ..... which , in NZ's case  means middleclass welfare recipients , property investors , the elderly , hip-hopsters on learning junkets to Tahiti , Hobbits , locomotive engineers , rugby union bosses , Amnesia Cup Yachties ....
 
Ye gads , it is a long list isn't it !
 
........ no freakin' wonder you're heading towards bankruptcy ...

funny....
LOL
regards

A government which is mostly useless , but benign
 
Benign?  A 20% increase ((2.5/12.5)*100) in consumption tax has been anything but benign for most households.
 
Give me less water via my shower head anyday!
 
 

Point 1 : Having experienced shower restrictors at a mining site in Australia , I can promise , you'd be screaming loud & long at a government who won't let you lather up , nor rinse off properly in the shower ....
 
.... . you spend 2 - 3 times as long under the water , seriously defeating the initial purpose of the restrictor , to cut water consumption ......
 
Point 2 : Doesn't it bother you , having a government who want to micro-manage your life for you ? ...... next they'll be trying a " sugar tax " on softdrinks , or a " fat tax " on McD's ! ..
 
...... doesn't your right to choose for yourself , to be responsible for your own life mean anything ?
 
( I buy plenty of stuff online , no GST ! )

Well, we've got a wetback, plus our own forest, plus our own water supply .. so the proposal wouldn't have had any affect on my lathering routine. BTW the intent wasn't directed at water conservation - rather it was about energy efficiency/conservation;
 
http://www.greens.org.nz/features/rumours-about-showers
 
But instead of getting the EE outcome from regulation (via amendments to the building code) - what does the Key government do?  It offers taxpayer subsidies instead!  Read 'em and weep;
 
http://smartenergysolutions.co.nz/index.php/news/entry/install_an_energy_efficient_showerhead_and_receive_50_credit/
 
http://www.energywise.govt.nz/funding-available/insulation-and-clean-heating
 
 
 
 
 
 
 

I have an issue if your choice adversly effects others....otherwise if you are water metered, yes.  The problem is other ppls ability to pay water rates and electricity is a factor in your choice. So if we need a new dam or power station because the well off can afford to over-consume...the poor also have to contribute....and they can ill afford to.
regards

Oh dear, Gummy, you have become captured by the bread lobby now. You be careful, remember when they say that the government want to foliate our bread, they actually mean the bread which you buy off them. Its not our bread, its still their bread. If you are really attached to non-foliated bread, you can still bake it yourself you know.
Its a similar principal to that shower head you use which filters out all the manditory florine in the water. You know some dentists think thats a good idea. Bunch of socialist dentists of you ask me, deeply troubling of course.
The most disappointing thing about the National government for me is that they totally have not lived up to the Austerity label, I mean they try to convince you that they have, but compared to Greece or Spain or Ireland their attempt does not live up to the hype. But then again I am bright enough to see that thats gonna really cack the economy up. Its not going to be very fair, but its going to cut NZs carbon foot print. It is a bit funny but un-adulterated, Douglas lead ACT policy would probably do more to cut NZs carbon emissions than a reasonably fair Green government policy. 
 

By some accounts that fluorine you talk about is put into the water to pacify the population. Having been on tank water for 15 years and filtered before that is it any wonder I am so bolshy :-P

huh? how would ACT cut?  unless you mean throw us into a depression worse than 1929?
regards

On reading your first comment .. the immediate thought that sprang to mind was .. if you were a long-in-the-tooth currency trader .. knew all the moves .. and knowing you're now in a position of power .. that if and when you make an utterance on a sensitive subject .. such as the value of the NZD .. would you or would you not be taking a private position in the NZD currency the day before? .. you know, a teeny little bit of insider shennanigans .. would be very tempting .. would you have the moral strength to deny yourself?

Well is it not already apparent that either morality or intelligence is lacking? Probably both, so I think we can assume he has himself a nice little bonus to play with. Now would you keep that bonus in NZD?

"They", the news media, should do a Mitt Romney on him and challenge him to publish his tax returns for the last 5 years. Plus this year.

Aint that the truth. So many think "He's wealthy, he must know what he's doing" - end of analysis. Ironically take this meritocratic logic based on personal wealth a bit further and Key wouldn't even make Parliament let alone PM, Graham Hart would be President for life with Michael Fay Minister of Finance and IRD, Alan Gibbs Minister of Social Welfare, Todd Family Ministry of Energy etc
Doesn't work overseas and it won't work here.

You could be right about that Sore.L. ......fear is probably what drives me....frankly he scares the bejesus outta me.

"While the government could directly control things like public spending and the way laws like the Resource Management Act were applied..."
 
But, John, you've done an absolutely abysmal job on both those counts as well !!!
 
Government Debt
http://www.interest.co.nz/Charts/Government/government-debt
 
Building Consents
http://www.interest.co.nz/charts/real-estate/building-consents-type
 
 
 
 
 
 

NZ needs a Prime Minister, John, not  another f*****g money trader

Bollocks
A Tobin Tax would go a long way toward dampening the currency speculator effects (a very large part of the currency that flows into and out of NZ) and, or filling the Govt coffers.

"That's really something which, in a freely floating market is subject to the market's interpretation, and subject to very extreme conditions, it's not the government's view that we should intervene."
 
Freely floating market my arse.  It may be a 'floating market' but it is definitely not 'free' from Govt manipulation...  many countries are pumping hundreds of billions of dollars & euros into the global economy in an obvious attempt to inflate away their debts and in the process devalue their currencies against the NZD.  In turn, encouraging a currency carry trade against the NZD that is slowly killing our exporters.  And apparently our esteemed leader doesn't think it's his job to comment on the OCR.  Get bent.  

Key is full of what I like to call "corrupt speak". He is ascrooked as they come. Focus on this, ignore that, blinkers! blinkers!, never mind that obvious fact or blatant hypocrisy, pretend everything is fine UNTIL the appropriate emergency/opportunity  comes along to manipulate, lie, BS, and screw over the taxpayer

He is very reminiscent to Silvio Berlusconi (with out the dubious family values)

So when it comes to hocking off some assets our levels of public debt are un sustainable, yet when it comes to justify statis on the NZD, our levels of public debt are low.
Surely any reporter worth their pound of salt could have picked up on that clanger?

Not the NZ media muppets

http://www.zerohedge.com/news/guest-post-matter-trust-part-two
Putting our trust and faith in a few unelected bureaucrats and bankers, who use their obscene wealth to buy off politicians in writing the laws and regulations to favor them has proven to be a death knell for our country. The captured main stream media proclaims these men to be heroes and saviors of the world, when they are truly the villains in this episode. These are the men who unleashed the frenzy of Wall Street greed and pillaging by repealing Glass Steagall, blocking Brooksley Born’s efforts to regulate derivatives, encouraging mortgage fraud, not enforcing existing regulations, and creating speculative bubbles through excessively low interest rates and making it known they would bailout recklessness. They have created an overly complex tangled financial system so they could peddle propaganda to the math challenged American public without fear of being caught in their web of lies. Big government, big banks and big legislation like Dodd/Frank and Obamacare are designed to benefit the few at the expense of the many. The system has been captured by a plutocracy of self-serving men. They don’t care about you or your children. We are only given 80 years, or so, on this earth and our purpose should be to sustain our economic and political system in a balanced way, so our children and their children have a chance at a decent life. Do you trust that is the purpose of those in power today? Should we trust the jackals and grifters who got us into this mess, to get us out?
 
Focused on the US but can we say anything is any different here?

It's no different here, meh and there's not a NZ journalist or politician with the balls to expose what's really going on.

Oh you naughty people, trying to question the political integrity of our beloved leader.
 
 
The only problem is most if not all of it is absolutely justified,

I wonder why no one here appears to have any comments on the new war memorial plans unveiled by our glorious leader just the other day -- what was the budget suggested? - around $80millIon I think - but of course that will at least double by the time it is done - Having said that it seems Key believes we can easily afford that cost - whatever it ends up at!But, surely this begs the question of why we cannot therefore afford to assist the citizens of Kaipara in dealing with the outrageous financial f... up that their regional [?] council has inflicted on them ---We can also afford to give Greece a billion dollar hand out apparently so just what in hell is going on ???

You're right. ANZAC day has been mythologised (deliberately) to the point where spending like this is untouchable. Even the Greens criticism was muted. They realise its a vote killer to question the mythology of noble sacrifice. This project plus the other WW1/Gallipoli commemorations will I'm picking approach $200m by the time they're finished.

It is going to be required so they have room for a new memorial isn't it?

No same memorial (currently being renovated). The money is to underground the road in front of the existing memorial and build a park/paved area to reduce noise and allow more people.
 
Perhaps they can squeeze in a memorial to the 1.5m Armenians killed in the genocide by Turkey, commemorated every year the day before ANZAC day.

No no I mean a NEW memorial.....going forward.

might be better to use the dosh  buy our boys fighting the mad mullahs in Afghanistan some decent  tanks . The  LAVs dont  fill me with confidence

JoKey all right. Fancy saying now that we are deep in it that "the Government CAN reform the RMA and public expenditure" (let alone shovelling out billions to cunning maoris) He should have got started on them years ago. Not as if the need was not obvious. What a drongo.
Ergophobia