Wednesday, 20 February 2013

NZ performs the Haka

In the currency war being unleashed around the world, central bankers have some weapons at their disposal but not many.  Trading strategies - money printing, security creation and bond buying have taken off in the last few years but the role of policy, briefing and government led signals are important too.  The most notable stunts have included a parade of camera work at the Bank of England gold vaults (including a visit by Queen Elizabeth II), sound bites by Russian central bankers and outright lies issued by the G20.

New Zealand has chosen to go for the talking down option (sensible given New Zealand is a small country with little reserves) but has really performed a Haka dance - that made famous by the All Blacks rugby team, defined by Wikipedia as:

... a traditional ancestral war crydance or challenge from the Māori people of New Zealand. It is a posture dance performed by a group, with vigorous movements and stamping of the feet with rhythmically shouted accompaniment...

As detailed by FT Alphaville, NZ is entering the fray:

....We believe the exchange rate is significantly over-valued relative to what would be sustainable long term in the absence of sizeable increases in the terms of trade and productivity....The Bank will intervene when circumstances are right. We will use the OCR as circumstances require and we’re exploring the scope to use macro-prudential instruments that address increasing challenges to financial stability associated with ongoing increases in house prices, and that can also support monetary policy.... (here).
Now, it is about to be Australia's turn, yet the RBA is silent...what gives?!

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