Pragmatism needed on currency

Pragmatism needed on currency

New Zealand can choose to influence its own currency despite the $600 billion dollar bond buy up from the Federal Reserve say the New Zealand Manufacturers and Exporters Association (NZMEA). While the objectives of monetary policy settings elsewhere are the major cause of our currency appreciation, evidence from other small, export exposed economies shows that this impact can be managed; exchange rates need not be a loose end.

NZMEA Chief Executive John Walley says, “This picture shows that Singapore has faced similar pressures to New Zealand from the quantitative easing in the United States, but they have limited its effect.”

“While the NZ Dollar has gone up 16 percent since June and bounced around all over the place, the Singaporean Dollar has appreciated 10 percent with a steady climb. Ironically for those who claim that New Zealand does not have the foreign reserves to manage the currency Singapore will have increased their foreign reserves significantly in this process.”

“If we look at the long-term trend it is not difficult to see why exporters in Singapore have thrived while those in New Zealand have struggled.”

“Total control of a currency is not possible, but a pragmatic approach to the issue can deliver better results,” says Mr Walley. “This is what our exporters need to see from the Government and the Reserve Bank.”

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