May 8, 2008

Certainly Yesterday's Tone from The RB Does Suggest Concerns

This from Stuff. Not highlighted sufficiently in the media covereage is the RB's commentary on the New Zealand dollar yesterday.

At current levels, New Zealand’s exchange rate remains
high relative to its long-term average. As discussed in box
B, uncertainty about the path of the exchange rate remains
elevated, but market perceptions of risk are weighted toward
a depreciation of the exchange rate in the medium term.
There is a risk that such an adjustment could be abrupt,
particularly if the slow-down in the economy proves more
pronounced than expected or if current turbulence in global
markets intensifies.