The exchange rate matters

The exchange rate matters - 8 October

Options to deal with the exchange rate, such as the Green Party’s recommendation to start quantitative easing, need to be explored say the New Zealand Manufacturers and Exporters Association (NZMEA). Quantitative easing is one of a number of measures that could be used to remove pressure on the exchange rate and a debate is needed on how these can be best used.

NZMEA Chief Executive John Walley says, “It is clear that New Zealand’s exchange rate is the key problem behind our poor export performance, and the resulting job losses we have seen over the past couple of months. Any denial of this problem is simply economic negligence.”

“The quantitative easing Russel Norman described over the weekend is one of the options that are being used overseas to deal with exchange rate competitiveness. Spending the money directly into the earthquake rebuild and building foreign reserves are both worthy objectives but they are different issues – it is worth noting that those who say printing money is a problem are happy to borrow and pay interest on money printed by other central banks.”

“There are other options available to deal with the exchange rate and protect the real economy; Switzerland offers a good example here.”

“It is true that a lower exchange rate will mean higher petrol prices and more expensive imports in general, but sooner or later a flat line economy means no jobs, and therefore, no flat screen TVs.”

“That is essentially the choice that confronts us.”

© Scoop Media