The NZ dollar is now buying more than AU$0.88, its highest since October 2008.
This follows a speech by RBA Governor Glenn Stevens today.
The record post-float high was NZ$1 = AU$0.9115 on October 16, 2008.
Stevens all but confirmed rate cuts are imminent in Australia. He reviews their cash rate next Tuesday, August 6, 2013.
Stevens said inflation would be no bar to a cut in interest rates if needed to support the economy, while highlighting the challenges ahead as their long boom in mining investment comes to an end.
He played down concerns that rising home or asset prices might stand in the way of a cut, saying that low rates were intended to nudge investors toward taking slightly more risk.
Click on the AU$ tab in the chart below to see the trend.
No chart with that title exists.
11 Comments
What was the RBNZ Governor to do?
The Reserve Bank did however drop its description of the New Zealand dollar as 'over-valued', instead describing it just as 'high', given its fall in the last two months. Read more
Let the NZD/USD pair languish just above 0.7800 and ignore the rising spread between the FX swap-implied rate and the OCR? Dislocation in one market called for action in another. Do the associated costs of a higher value NZD/USD pair compensate for constant uninterrupted dependence on wholesale foreign borrowing? Read more
By implication the asymmetrical outcomes associated with currrency swapped wholesale foreign borrowings have made it a great time to clean up in the outright and cross rate NZD FX markets. Somedays you just have to thank both the banks and regulators for their efforts in all directions. Too bad about the exporters - no doubt the sharper variety are on to it and well long KIWI.
Loose lips ? www.oddee.com/item_96587.aspx
Australia remains NZ's largest export market and the one currency that hadn't appreciated dramatically in the last few years. Current rates simply guarantee a current account blow out down the track as it is already heading south from high levels.
We simply cannot go on borrowing or floging assets to pay the interest on our foreign debts which is what we are doing by definition with a trade deficit.
Do you remember Fonterra having to rent temporary warehouse space to stockpile milk powder they could not sell because of the exchange rate in 2008/2009 ?
ThisAUS$/NZ$ exchange rate is already hurting non- dairy exporters and tourism.
It will eventually start to impact on dairy exports.
Could we see a milk powder mountain in storage like 2008 /2009?
The Government will only react when the all powerful Fonterra starts to complain to governmet , and Fonterra will start to complain very soon , when the exchange rate goes over 90cents to the Aussie , if they have not done so already
Who knows , we could even see a further OCR cut just to get the currency down .
Fonterra will start to complain very soon , when the exchange rate goes over 90cents to the Aussie , if they have not done so already
Do you equate this news as a complaint or plain stupidity fighting the forces of reality?
Fonterra has lifted its forecast farmgate milk price rice for the 2013-14 season by 50 cents to $7.50 per kg of milk solids and announced an estimated dividend of NZ32c per share - amounting to a forecast cash payout of NZ$7.82.
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.