RT @bernardchickey: Real question for RBNZ is why isn't it cutting rates? Core inflation below 2% target for 6 years. Jobs growing strongly…
9/02/2018 8:34 AM
RT @MkBlyth: Thought for the day: Let's say rising wages cause inflation panic cause equity crash. So we have built a system where stabilit…
9/02/2018 8:23 AM
RT @MkBlyth: Oic of the day. HT to @DougHenwood for nailing this. Not only is a 2.4% annual growth in wages unlikely to start an inflationa…
9/02/2018 8:22 AM
RT @Adherium: CEO @arik_anderson featured in @beckershr - Rule No. 1 for medical technology: Stay out of the doctor’s way https://t.co/d5FP…
1/02/2018 5:10 PM
RT @MkBlyth: Picture of the day from Llewellyn Consulting. Gross World Product went from 18 to 77 trillion since 1980. Massive Growth. Wher…
1/02/2018 5:10 PM
RT @Adherium: In Australia, nearly 40 per cent of #asthma sufferers rely on reliever medications to tackle regular flare ups, instead of us…
1/02/2018 5:10 PM
RT @Adherium: In the latest @atscommunity report, #asthma costs the US economy more than $80bn annually in medical expenses, missed work an…
17/01/2018 8:06 PM
RT @MkBlyth: Interview on WBUR (Boston) with Chris Lydon @radioopensource last night. Chris is the guy that gave me my radio voice a decade…
7/01/2018 12:45 PM
RT @Valuetrap13: There is a simple reason corporations are not investing as much. It's the right hand scale. Macroprudential policy based…
7/01/2018 12:32 PM
RT @Adherium: Sharp rise in #mHealth app usage - health condition management apps now account for 40% of all health-related apps https://t…
7/01/2018 12:32 PM
Recent Post Comments
I am sorry but this comment section has been disabled due to spam. My contact details are easy to find, please contact me if you want to comment or discuss anything on this blog.

Print-friendly
4
JUN 10

Export and Carry Trade Exposed




The problem is New Zealand is both trade and carry trade exposed. Exports at 30 odd percent of GDP and the weight of the carry trade, even now the wires say we see the NZ$ traded at 43% of GNP on a daily basis (by the way that is the highest in the world).


There is a feeling – again largely in the non-traded economy – that inflation pressures are growing. Hence the conventional unidimensional approach lift the OCR, that drives the carry trade and lifts the dollar. That of course lowers returns for exporters – the last time I looked that included the agricultural sector as well as manufacturers.


I have to say I have no idea how Federated Farmers can claim to represent their trade exposed members who did not climb on the bandwagon of farming capital gains, sacrificing their needs in favour of the ones who did and in so doing helped create the mess we are in.


A macro prudential response is the only one that does not come with an exchange rate kicker and that is the only one that can damp inflation pressures and support exports at the same time.
Is this really so hard to understand.

In a deleveraging world income statements are much more important that balance sheets.
 


tags: exports, trade, macroprudential
I am sorry but this comment section has been disabled due to spam. My contact details are easy to find, please contact me if you want to comment or discuss anything on this blog.