2 Jul 2013
Flash: RBNZ to limit NZD strength? – BMO
FXstreet.com (London) - Stephen Gallo European Head of FX Strategy at BMO Financial Group commented on the strength of the NZD.
He said, market positioning aside, at this stage he takes the view that there is virtually nothing other than aggressive RBNZ rhetoric, macro-prudential measures or physical intervention (or some combination of two or more) that can seriously make buying the NZD from these levels fruitless for speculators on the basis of risk-reward.
He hopes that the RBNZ does find an inventive way to limit NZD strength, mainly because it’s rather unfair for an economy to lose trade-weighted competitiveness and for a central bank to be seen as “losing control” purely as a result of such inane forces like the “quest for yield” or volatile capital flows which are not at all of the RBNZ’s making. “Nevertheless, neither time nor market pressures appear to be on the RBNZ’s side at present.”
He said, market positioning aside, at this stage he takes the view that there is virtually nothing other than aggressive RBNZ rhetoric, macro-prudential measures or physical intervention (or some combination of two or more) that can seriously make buying the NZD from these levels fruitless for speculators on the basis of risk-reward.
He hopes that the RBNZ does find an inventive way to limit NZD strength, mainly because it’s rather unfair for an economy to lose trade-weighted competitiveness and for a central bank to be seen as “losing control” purely as a result of such inane forces like the “quest for yield” or volatile capital flows which are not at all of the RBNZ’s making. “Nevertheless, neither time nor market pressures appear to be on the RBNZ’s side at present.”