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11
DEC 09

Why say anything?




If the change was so subtle why make it and then wipe $400m or so off our exporters and make the overseas speculators rich?

 

RBNZ Governor Bollard made the following comments on Radio New Zealand this morning:

• MARKETS HAVE OVERREACTED, ESPECIALLY FOREX

• MARKETS REACTION MORE THAN EXPECTED

• THURSDAY'S POLICY CHANGE WAS SUBTLE, NOT MAJOR

WELLINGTON (Dow Jones)--Reserve Bank Governor Alan Bollard said Friday that markets, especially foreign markets, had overreacted to Thursday's monetary policy change, which he said was subtle rather than major.

"There has been a bit of an overreaction, especially in the forex market," Bollard told Radio New Zealand. "The reaction has been more than we expected."

The New Zealand dollar rose almost two U.S. cents to a high of US$0.7318 after Thursday's quarterly Monetary Policy Statement in which the bank signaled it would start raising interest rates in mid-2010 rather than the previous guidance of the second half of 2010. The Kiwi was trading at US$0.7277 shortly after Bollard's comments.

The NZD-AUD moved especially aggressively, hitting as high as 0.7975 overnight, having been at 0.7835 immediately prior to the RBNZ OCR announcement and accompanying statement. It currently trades at 0.7935/0.7955 region.

Reaction was also strong in the debt market, where two-year swap rates jumped 23.5 basis points to 4.475%.
 


tags: bollard, ocr, exchange rates
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