Aus/NZ solidarity

Australians are a competitive lot.  They punch above their weight on the international stage, in particular in the sporting arena and Aussies like to win, and, to play in the big leagues.  In the world of currency management, or in particular, the global currency wars, the FT has reminded that Australia and New Zealand are unfortunately minnows when it comes to suppressing the exchange rates of their currencies from hot money appreciation - they hold a "peashooter" rather than a bazooka.

...New Zealand’s direct action was the most aggressive, but it seems designed to soften the kiwi’s strength rather than halt the trend in its tracks. Which is just as well given that a housing bubble is limiting officials’ room for manoeuvre. With two-year bond yields near 2.5 per cent (compared with the US at 0.23 per cent and Japan at 0.11 per cent), it is hard to see the New Zealand dollar extending last week’s 2 per cent drop against its US counterpart.
Meanwhile, Australia’s unexpected rate cut had a similar effect on an Aussie dollar hovering just above parity with the greenback. Bond yields there are in line with Kiwi ones. So are Korea’s. Of the three Seoul is historically the most aggressive in acting to stem currency strength. But it faces the biggest problem, namely that it is in effect fighting not the dollar but the yen, against which the won has hit four-year highs (here).

And this game has gone global.  As Zerohedge notes, even Israel has joined, though with a not very convincing alternative excuse other than the currency wars.