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30 Sep 2014
RBNZ intervention: Not as successful as expected? - Nomura
FXStreet (Bali) - Charles St-Arnaud, Economist at Nomura, notes that August's NZD interventions by the RBNZ may not have had much of an impact on the currency, as the currency only managed to depreciate by 1.6%.
Key Quotes
"Looking at the data for August, it is interesting to note that the interventions may not have had much of an impact on the currency. Since July NZD has depreciated. August was the month with the smallest depreciation of just 1.6%, while it depreciated by about 3.0% in July and by 7.2% so far in September. "
"The lack of significant depreciation suggests that the interventions were not as successful at pushing the currency lower as may have been expected. Moreover, it is also strange that the RBNZ did not divulge its interventions back in August and benefit from the surprise announcement having a greater impact on the currency. "
"Moreover, looking at previous patterns of RBNZ interventions, especially the 2007-08 period (just before the crisis), the RBNZ has often conducted interventions for three to four consecutive months (see RBNZ wants to put a ceiling on NZD 15 May 2014).
"However, there are very few signs that the RBNZ acted in September, apart from the comment in the post-policy meeting statement that ‘the exchange rate level remains unjustified and unsustainable’ and last week’s statement reiterating the RBNZ desire to see the NZD weaker."
"If anything, the recent depreciation in NZD is driven mainly by the strengthening of USD. However, the verbal interventions may have accelerated the move and made NZD an attractive choice to express long USD views."
Key Quotes
"Looking at the data for August, it is interesting to note that the interventions may not have had much of an impact on the currency. Since July NZD has depreciated. August was the month with the smallest depreciation of just 1.6%, while it depreciated by about 3.0% in July and by 7.2% so far in September. "
"The lack of significant depreciation suggests that the interventions were not as successful at pushing the currency lower as may have been expected. Moreover, it is also strange that the RBNZ did not divulge its interventions back in August and benefit from the surprise announcement having a greater impact on the currency. "
"Moreover, looking at previous patterns of RBNZ interventions, especially the 2007-08 period (just before the crisis), the RBNZ has often conducted interventions for three to four consecutive months (see RBNZ wants to put a ceiling on NZD 15 May 2014).
"However, there are very few signs that the RBNZ acted in September, apart from the comment in the post-policy meeting statement that ‘the exchange rate level remains unjustified and unsustainable’ and last week’s statement reiterating the RBNZ desire to see the NZD weaker."
"If anything, the recent depreciation in NZD is driven mainly by the strengthening of USD. However, the verbal interventions may have accelerated the move and made NZD an attractive choice to express long USD views."