By BRIAN FALLOW
In a little over an hour it was done. Late yesterday afternoon MPs voted by 84 to 35 to end the 19-year era of the clean float of the New Zealand dollar.
It should have been a triumphant moment for Finance Minister Michael Cullen, but he managed to be reminiscent of the Punch cartoon in which a disgraced Edwardian maidservant, cradling an illicit infant, explains to her mistress: "But it's only a very little baby."
"All in all the change to the Reserve Bank's intervention policy arrangements is not a particularly big change - or one that is likely to have a particularly big effect.
"But any small moderation of the excessively variable exchange rate would be welcome."
It was vital, he said, to keep politics out of this exercise. For politics, read Ministers of Finance.
There was not much risk, said Cullen, that the policy would attract the attentions of currency speculators.
"Not indeed that we don't see currency speculators attracted to New Zealand - or back to New Zealand," he said in a reference to National's associate finance spokesman, John Key, the only MP present with any actual experience of global foreign exchange markets.
Key said the policy would not work, and was moreover opposed by Federated Farmers.
He compared it to taking a barrel of clean whisky and tipping a cupful of mud into it. If it was so easy to pick the highs and low of the cycle, why not become currency speculators on a much bigger scale?
"The reality, as the Treasury says, is that it is very difficult to pick the turning points."
New Zealand First leader Winston Peters denounced Key as the callow voice of the capital markets, as distinct from the real economy, and invoked the ghosts of National leaders past: "Can you imagine Holyoake making a speech like that?"
But it was the spectre of Rob Muldoon that Act's Rodney Hide conjured up.
What a backward step it was to suggest that Reserve Bank Governor Alan Bollard could stand like King Canute before the world's capital markets saying, "This is as far as the New Zealand dollar shall go. I command you to stop!"
That this is not really what Bollard is proposing did not deter Hide's rousing tirade to a small, unappreciative audience.
Dirty float wins the day in vote on intervention
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