RBNZ'S McDermott says NZD needs to adjust down
Assistant Governor John McDermott's comments during an interview push Kiwi down a quick 40 pips.
- NZ dollar needs to adjust down.
- RBNZ statement changed language in statement as signal to markets.
- change to "need" is a little nudge to markets.
- change is first step towards possible intervention.
The changes in today's statement to which McDermott refers are as follows:
"The trade-weighted exchange rate has increased since the May statement, partly in response to a weaker US dollar. A lower New Zealand dollar is needed to increase tradables inflation and help deliver more balanced growth."
Compared to May statement:
"The trade-weighted exchange rate has fallen by around 5 percent since February, partly in response to global developments and reduced interest rate differentials. This is encouraging and, if sustained, will help to rebalance the growth outlook towards the tradables sector."