Just a follow-up on today’s intervention news from the RBNZ
- Anything above 500m is viewed as having significance (so 521 meets market criteria)
- August’s intervention was the largest since in 2007
- Market talk of intervention on August 25 when the kiwi dropped rapidly in thin trading (it was a UK holiday also that day)
- The RBNZ has been warning of the potential for intervention (for a long time … so much so that the ‘cry wolf’ response was widespread)
- Last week, though, Wheeler’s unscheduled paper on “Why the NZ exchange rate is unjustified and unsustainable” was seen as a very strong hint of intervention (& that already had occurred by then, of course), especially as it came only a few days before the scheduled F5 table update today
- Today’s report confirms the intervention took place, and shows the RBNZ is well aware of how to get the most bang for its intervention buck
- The threat of more intervention to come now hangs over the NZD market and will keep longs wary and less willing to buy (which, paradoxically, will fuel the next rally, when it comes)
No need to ask why this guy is smiling
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NZD down nearly 2% on the day now
