RT @monteiro: Next Friday. We’re out. The only thing Twitter cares about is engagement. Let’s stop giving it to them. Reclaim your life. Re…
13/08/2018 11:51 AM
RT @bernardchickey: ‘Heaven help us’ https://t.co/X8mdEKCi6X
1/08/2018 3:35 PM
RT @EvonomicsMag: Biologist Lixing Sun: "Existing data show that across the OECD nations, the higher the level of social trust, the greater…
30/07/2018 4:08 PM
RT @Adherium: Adherium Receives Additional U.S. FDA 510(k) Clearance, Setting in Motion a Full U.S. Consumer Launch of the @GetHailie ™ Sol…
30/07/2018 4:03 PM
RT @garths: @Smartinhaler @Adherium "Should We Make A "Smart" NHS?" via @forbes https://t.co/soC1TVv5Yr
30/07/2018 4:00 PM
Chinese Citizens Are Using Blockchain to Warn Each Other of Unsafe Vaccines https://t.co/bc8uVw9goZ #SmartNews
26/07/2018 5:03 PM
RT @Adherium: Adherium's @GetHailie solution, a sensor-based medication monitoring system, heads for direct-to-consumer sales with an eye o…
19/07/2018 8:46 PM
RT @bernardchickey: Awful, awful situation because we didn't invest in infrastructure and people to deal with an unprecedented population s…
28/06/2018 8:28 PM
Excellent preso from Steve Keen: https://t.co/z4nzCk3DpX
23/06/2018 10:02 AM
Automation and jobs not a bad debate: https://t.co/NZjeEHHMsj
9/06/2018 1:35 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

Carry Trade and Exchange Rates




New Zealand is highly exposed to both trade and carry trade. Exports at 30 odd percent of GDP and the weight of the carry trade with respect to GDP, 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 moves the NZ$ well above where trade alone would place it - an overvalued currency (see IMF posts).  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.

Much more discussion here (some of it is well informed):

www.interest.co.nz/news/exporters-call-reserve-bank-delay-ocr-hike-until-sept-16#comment-548186


 


tags: federated farmers, macroprudential, carry trade
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.