New Zealand’s central bank is prepared to increase currency sales to combat a “significantly over-valued” exchange rate, Governor Graeme Wheeler said.
“In recent months we have undertaken foreign exchange transactions to try and dampen some of the spikes in the exchange rate,” Wheeler said in e-mailed notes of a speech in Auckland today. “We are prepared to scale up our foreign exchange activities if we see opportunities to have greater influence.”
Wheeler has kept the benchmark interest rate at a record-low 2.5 percent to help take pressure off the currency, which is the second-strongest in the past year among the 10 currencies tracked by Bloomberg Correlation-Weighted Indexes. The central bank is reluctant to cut borrowing costs because that may stoke a housing boom and fan inflation, Wheeler said.
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