Economist Ganesh Nana wants the Reserve Bank to intervene in foreign exchange markets for as long as it takes to bring the kiwi dollar down.
The Berl economist told deer farmers in Wellington the bank should become a daily trader till the exchange rate fell to “something sensible for our export sector”.
The dollar has traded close to US86c recently, falling to almost US80c this week, before rebounding to about US80.9c yesterday.
“Sooner or later the speculators – Japanese housewives and Belgian dentists – will find somewhere else to play.”
That may be one of the most risky and/or stupid strategies I have ever seen. In fact the more a Government intervenes in a currency, the greater the profits are for those speculating against it.
I can think of several countries that have tried that strategy – and all have lost.
The reason why they played in New Zealand was because they knew it was an easy win.
Asked if New Zealand had the resources to do this, Nana replied, “It’s called a printing press. I’m not kidding,” he said to laughter.
“You can afford it. The Government has the legal right to print as much dollars as it likes.”
The Green Party policy. Just print as much money as possible.
It certainly would lower the dollar.
It will also increase prices and bring back rampant inflation.Tags: Exchange Rates, Ganesh Nana, inflation