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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 (1076)	3/3/2004 12:07:54 PM
From: gregor_us	Respond to of 116555

I Think We'll Get a Chance to See Them Try, Darfot. After this dollar rally fails and the Economic Recovery chorus stops drinking the Kool-Aid, I think we'll get a chance to see how the RBNZ and RBA attempt to handle a Kiwi above .7000 and an AUD above .8000. As I have posted before, both Banks face myriad problems--in both the Best of Times, and the Worst of Times. Both banks are in highly unique situations presiding over small economies. Big economy central banking, in the Northern Hemisphere, offers many lessons that simply don't apply... The RBA actually bought the AUD during the Financial Asian Crisis of 1997 to defend the AUD. It accomplished nothing. And as I pointed out earlier, the RBNZ jacked the short term cash rate back then to defend the NZD. Again, it did nothing to move the forex rate. I believe what is at issue--is whether either bank can influence the forex rate at the extremes of the Highs, and the Lows. I predict they will jawbone hard at .8500 and .7500 respectively. If you are keenly interested in this subject, I suggest you look at the Balance Sheets right now of both countries. Aside from the trade deficits, I'm not aware the govt finances have ever been stronger in both countries. The long journey from a fixed currency tied to the Pound, and a full adoption of Post-War British Socialism, is now complete...