New Zealand's Reserve Bank lacked the firepower to make much
of a dent by intervening in the currency market, Craigs
Investment Partners broker Peter McIntyre said yesterday.
Responding to suggestions the Reserve Bank might intervene to
lower the value of the dollar, Mr McIntyre said the central
bank might use any currency reserves, pushing them into the
market to lower the value of the dollar.
''Usually, there is a short-term effect but no long-term
benefit. In the past, one governor made money by intervening.
We don't have the weight of currency available to have any
real large impact.
''Is this a good use of the Reserve Bank's funds? The answer
is probably no,'' he said.
Reserve Bank governor Graeme Wheeler said yesterday export
prices had fallen and they would reduce primary sector
incomes in the coming year.
With the exchange rate yet to adjust to weakening commodity
prices, the level of the New Zealand dollar was unjustified
and unsustainable and there was potential for a significant
Finance Minister Bill English earlier said the dollar was
unsustainably high and it was over-valued by about 10% to
Economists took Mr Wheeler's comments to mean the bank was
considering intervening to reduce the value of the dollar.
However, Mr McIntyre said the Reserve Bank lacked the
firepower to make a difference. Intervention in Japan had
worked but the Japanese economy and central bank were
''Our currency is one of the top 10 traded currencies in the
world and it is out of proportion with the size of the