In my opinion, that's the way it needs to be done. Bollard knows that speculation and carry are driving the market, not the fundamentals that you all mentioned. And he fired plenty of warning shots across the bow but no one listened (and they never do, of course). So this is his latest shot. I would do the same thing.
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NZD/USD ... just got my head handed to me
- Thread starter len979
- Start date
In my opinion, that's the way it needs to be done. Bollard knows that speculation and carry are driving the market, not the fundamentals that you all mentioned. And he fired plenty of warning shots across the bow but no one listened (and they never do, of course). So this is his latest shot. I would do the same thing.
Quote from trend_guy:
1. trend
2. doubling down
3. cut losses quickly
how did you last 3 years?
Yes, humility is required when you win; I made some money yesterday -- but it wasn't like I broke the bank; it retraced the previous days trade and a little extra. I've been doing this long enough to know you win some, you lose some. (But try to keep the wins bigger than the losses.) At the end of the year, the balance sheet is what I look at and either celebrate or retool. Is this the start of a long term trend down for the kiwi or a more intermediate trend down? Dunno. I have a handle, I think, on the Kiwi fundamentals; it's the dollar side where I have a uncertainty (and the yen side and I can't look at a China chart without getting severe vertigo.) I do think you can get a few cents out of the Kiwi over the next few months. Beyond that, though, who knows?
Finance Minister Michael Cullen is warning international investors the New Zealand dollar is not a "one-way bet" after the Reserve Bank stunned markets by dumping the Kiwi dollar to drive the currency down.
SHOCK TACTICS ON KIWI MEET MIXED RECEPTION
DAVID HARGREAVES: RESERVE BANK BETS PLENTY IN DOLLAR GAMBLE
The action, the first time the bank has intervened in the foreign currency market since the dollar was floated in 1985, was initially successful, shaving US1.4c off its value.
However, the bank was nervously watching European and United States markets overnight for signs that the move has worked.
Government sources said Reserve Bank governor Alan Bollard's aim was probably to protect farmers and exporters by lowering the currency, while targeting the overheated domestic market through interest rate rises.
He raised the official interest rate to 8 per cent last week after a third wind in the housing market and a $2 billion windfall for dairy farmers threatened to push inflation higher.
Dr Bollard confirmed that he had intervened yesterday afternoon, because the dollar was "exceptionally and unjustifiably high".
After touching US76.2c before the news broke yesterday, the Kiwi fell to US74.82c early last night.
A spokesman would not say how much the bank had sold. But National's finance spokesman Bill English believed $300 million had been sold, from $3.5 billion reserves.
The bank's guidelines are to intervene when the currency is exceptionally and unjustifiably high or low by economic fundamentals, when intervention is consistent with the bank's inflation targets and has a reasonable chance of success, Dr Cullen said.
"Today's action is a reminder to people if they over-invest in the New Zealand dollar they could suffer losses."
Dr Bollard said the action should not be seen as sending any signals about future interest rate levels.
However, BNZ economist Stephen Toplis said it was a clear signal that Dr Bollard had no intention to raise rates further.
Dr Bollard's move is a bid to unsettle speculators who have banked on a strong dollar while taking advantage of New Zealand's high interest rates.
But some market watchers saw it as contradictory, because a lower dollar would push up import prices, and therefore inflation, when the bank was raising interest rates.
Mr English said Dr Bollard should intervene rarely.
"I can only assume he thinks he's at the top of the cycle. If he thought the dollar was going to go even higher, then it would be a bit pointless to be ... on the accelerator with one foot and on the brake with the other. It's a tightrope that he's walking, and we hope it works."
SHOCK TACTICS ON KIWI MEET MIXED RECEPTION
DAVID HARGREAVES: RESERVE BANK BETS PLENTY IN DOLLAR GAMBLE
The action, the first time the bank has intervened in the foreign currency market since the dollar was floated in 1985, was initially successful, shaving US1.4c off its value.
However, the bank was nervously watching European and United States markets overnight for signs that the move has worked.
Government sources said Reserve Bank governor Alan Bollard's aim was probably to protect farmers and exporters by lowering the currency, while targeting the overheated domestic market through interest rate rises.
He raised the official interest rate to 8 per cent last week after a third wind in the housing market and a $2 billion windfall for dairy farmers threatened to push inflation higher.
Dr Bollard confirmed that he had intervened yesterday afternoon, because the dollar was "exceptionally and unjustifiably high".
After touching US76.2c before the news broke yesterday, the Kiwi fell to US74.82c early last night.
A spokesman would not say how much the bank had sold. But National's finance spokesman Bill English believed $300 million had been sold, from $3.5 billion reserves.
The bank's guidelines are to intervene when the currency is exceptionally and unjustifiably high or low by economic fundamentals, when intervention is consistent with the bank's inflation targets and has a reasonable chance of success, Dr Cullen said.
"Today's action is a reminder to people if they over-invest in the New Zealand dollar they could suffer losses."
Dr Bollard said the action should not be seen as sending any signals about future interest rate levels.
However, BNZ economist Stephen Toplis said it was a clear signal that Dr Bollard had no intention to raise rates further.
Dr Bollard's move is a bid to unsettle speculators who have banked on a strong dollar while taking advantage of New Zealand's high interest rates.
But some market watchers saw it as contradictory, because a lower dollar would push up import prices, and therefore inflation, when the bank was raising interest rates.
Mr English said Dr Bollard should intervene rarely.
"I can only assume he thinks he's at the top of the cycle. If he thought the dollar was going to go even higher, then it would be a bit pointless to be ... on the accelerator with one foot and on the brake with the other. It's a tightrope that he's walking, and we hope it works."
..."Besides dairy, lamb, a little wool, does NZ export anything of note, except its dollars, of course?"..
Exports to Aussie
- Split Enz
- Crowed house
- Pha Lap
- Pavlova
- Better Beer
Exports to UK
- All Ex AllBlacks
- Anybody aged between 20 and 30 doing there OE
- Better Beer
Exports to USA
- Our saliors on BMW Oracle in the Americas cup
- NZ SAS via Afganastan
Sooooo piss off !
Exports to Aussie
- Split Enz
- Crowed house
- Pha Lap
- Pavlova
- Better Beer
Exports to UK
- All Ex AllBlacks
- Anybody aged between 20 and 30 doing there OE
- Better Beer
Exports to USA
- Our saliors on BMW Oracle in the Americas cup
- NZ SAS via Afganastan
Sooooo piss off !