The visible hand in economics

Cullen is all over the show

Posted on: July 24, 2007

Our finance minister has decided to explain why the currency popped over US$0.81 today:

“The story of the last couple of days is very much the story of the US dollar continuing to decline. We really haven’t changed much against currencies like the Australian and so on over that period of time and nothing we can do can affect the United States dollar in coming down.”

Now if he was talking about how the currency had moved over the past year he would be right. We have moved more against the yen and the $US than other currencies. However, he is talking about the last few days. During this time our currency has appreciated against all the major currencies. This is because everyone thinks we will lift rates again, so they are all getting excited. I agree we can’t stop the US$ falling, however thats not the reason for the NZ$ appreciation over the last few days.

It amazes me that he can say things without looking at the numbers, he’s just lying. Now I know he’s not an idiot (although I’m sure some of you will try to argue that with me), he’s just manipulative, and he shouldn’t be allowed to talk such tripe.

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2 Responses to "Cullen is all over the show"

Of all people I amazed you are trying to defend his intelligance?

At the end of the day he’s a politician and he’s always going to manipulate things so that it’s someone else’s fault.

I must say I’m also suprised that you are following the Doogue school and attributing exchange rate movements to our interest rates, not that I disagree with your argument.

Now, I don’t think the exchange rate necessarily should follow exchange rates. After all if the interest rate and the stock exchange moved in opposite directions, then capital inflows and outflows should sort of cancel each other out. All I am saying is that, in this case, capital inflows into the bond market have had a significant affect on the exchange rate.

I know he is a politican and so he is manipulative, however that does not make his actions right. I think that economics correspondants (real ones, who have actual power) should make more of an issue when he says a load of horseshit.

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