As mentioned here earlier, the high NZ dollar is a symptom of domestic imbalances not a cause – so instead of looking at intervening in the dollar we should be trying to understand exactly what is driving structural issues in the economy.
A couple of articles that follow on in this view are:
- Brian Gaynor in the Herald, discussing the incentives towards property investment.
- Westpac on the indirectness of any link between the OCR and our structural issues.
With the Westpac piece everyone jumped on the idea that “a lower OCR doesn’t necessarily imply a lower currency”, which is true. However, I felt the main point was more to do with the inability of monetary policy to solve structural problems in the economy – a point I agree with completely.