Take Control Of NZ’s Currency
February 20th, 2009
In July 2007 The Main Report quoted NZ Institute head David Skilling, who was calling for NZ to take more control of its currency rather than leaving the determination of its value to foreign currency markets. At the time Skilling advocated either merging the NZ dollar with the Aust dollar or at the very least pegging its value to the Aust dollar within a range of US66-60c. Skilling said it could be done - both Ireland and Singapore have pegged their currencies - and would provide exporters with certainty and the potential to lower the cost of capital.
With the NZ dollar now headed for a period of sustained low value against the US, is it now time to look again at fixing the currency - or even more politically dangerous, currency union with Aust? The recent rapid fall of the dollar has left few people cheering. In fact most would agree a low dollar implies a poorly performing economy, and leaves everyone worse-off. Finding a way to minimise these fluctuations in the exchange rate are becoming a major issue. Hopefully we can find some consensus and move forward.
Tony Doe, Associate Editor tdoe@themainreport.co.nz
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