The New Zealand dollar closed stronger today despite a carefully constructed effort by Reserve Bank governor Alan Bollard to talk it down.
The kiwi ended at US69.35c against its US69.18c opening. It had dipped to US69.0c ahead of the speech as the rumour mill got a head of steam.
Although Dr Bollard gave a hard-hitting speech in which he warned of imbalances and "significant excesses" in the economy and said the New Zealand dollar was over-valued, dealers said it was all known.
"The macro picture says the New Zealand dollar is overvalued, and in a year the New Zealand dollar is likely to be closer to US60c than US70c, but they are still on a tightening bias and that will underpin the currency." said ANZ National senior dealer Mark Elliott.
Dr Bollard said there would be a "correction" to the imbalances but the "adjustment process may not be painless". The bank would not stand in the way of an exchange rate adjustment "accepting that a short-term boost to tradables inflation may be an unavoidable consequence of adjustment".
In a message aimed at bringing the dollar down, Dr Bollard said overseas investors "should also consider the downside scenario when making their investment decisions".
- NZPA
<EM>Currency:</EM> Dollar sails on despite warning
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