New Zealand Dollar Firm As RBNZ’s Wheeler Tries Talking It Down
- RBNZ Governor Graeme Wheeler once again fretted the New Zealand Dollar’s altitude
- He even mentioned the “I word” – intervention
- The New Zealand Dollar slipped, but barely
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The New Zealand Dollar proved itself perhaps surprisingly resilient Thursday despite what might be thought an assault from the head of its own central bank.
Speaking before a Select Committee of the country’s Parliament, Reserve Bank of New Zealand Governor Graeme Wheeler was unusually explicit for a central banker on the subject of the currency.
“We would like to see a lower exchange rate,” he said, before reminding his listeners around the world that intervention in the foreign exchange market is “always open” to the RBNZ. Wheeler noted that strong domestic growth had boosted demand for the currency and said that he didn’t feel a rate cut was needed to bring inflation back up to its 2% target level.
Despite the use of such explicit terms, NZD/USD resolutely refused to fall far. Given rising tensions over North Korea and incipient US Dollar weakness across the board markets clearly have more pressing things to worry about for now.
However, Wheeler joins Reserve Bank of Australia Deputy Governor Christopher Kent this week in worrying about the strength of the currency in his charge.
Mr. Kent explicitly linked a stronger Australian Dollar to economic growth worries on Wednesday. The central banks of both countries have upped the volume of their barking when it comes to what they feel is excessive currency strength. Whether they will bite, via that intervention in the market, remains to be seen.
Still, the current market mood underlines the tricky task facing both, and trying to lift either the New Zealand or Australian Dollars far against the beleaguered greenback right now would mean leaning into a very heavy opposing gale.
Earlier the RBNZ left interest rates on hold at their record, 1.75% low, as expected.
— Written by David Cottle, DailyFX Research
Contact and follow David on Twitter: @DavidCottleFX