Reserve Bank 'lacking' firepower

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 fall.

Finance Minister Bill English earlier said the dollar was unsustainably high and it was over-valued by about 10% to 15%.

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 ''different beasts''.

''Our currency is one of the top 10 traded currencies in the world and it is out of proportion with the size of the country."

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