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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Wyätt Gwyön who wrote (972)	3/1/2004 10:30:01 PM
From: gregor_us	Read Replies (5) \| Respond to of 116555

History Has Shown New Zealand is Virtually Powerless to sustain any intended effect on the exchange rate. With historically high levels of foreign ownership of the govt debt, but as a country of only 4 million, they have not intervened in the FOREX for years--(I'm pretty sure since free-float, never...). New Zealand is barely in control of monetary policy. Small changes at the margin--like young Kiwi's in a periodic wave bailing from Europe and coming home to buy houses--have enormous effects. At .6900 the Farmers and Exporters are already up in arms. They all belong to collectives which help them hedge the FOREX but I am told by "my guy" in Auckland the bulk of the hedges went only as far as .7000 NZD/USD. Meanwhile, the worst thing poltically for the government--which is running substantial surpluses now--is to see rates hiked--or even maintained at current levels as it supports the currency. But the house price inflation is out of control--so the RBNZ hiked. But hey, even if the RBNZ cut--the forex market speculators would take control anyway. This is the history of NZ's fx. Being the RBNZ is "like" the WORST job in the world! (Poor Alan Bollard!)