Alliance Backs Calls for Managed Exchange Rate

Alliance Party media release FOR IMMEDIATE RELEASE Tuesday 7 April 2009

The Alliance Party has endorsed calls by economists to introduce a managed exchange rate.

Alliance Economic Development Spokesperson Quentin Findlay supports calls by BERL senior economist Ganesh Nana for such an action which Mr Findlay says would be a "return to economic sanity" as the New Zealand dollar reached a 12 week high against the US Greenback this week.

"The New Zealand dollar is riding the economic rollercoaster, peaking and plunging."

“This has produced a yo-yo effect for the public in terms of the cost of some consumer products. The most notable of these is petrol.”

Mr Findlay says this means uncertainty for our exporters and importers who cannot plan ahead.

"It makes economic planning difficult and it costs New Zealanders jobs and financial stability."

Mr Findlay says the floating dollar had made New Zealand a puppet of the money markets.

“The fact that our dollar is one of the ten most tradable currencies is worrying. Are we running our economy for the benefit of our own people, or international speculators?"

Mr Findlay says the chaos was forced upon the New Zealand economy several years ago by speculators, whose actions ultimately forced the then Minister of Finance Michael Cullen and the Reserve Bank to intervene in an attempt to stabilise the dollar and the economy.

He says that there are democratic reasons for managing the exchange rate as well as economic ones.

For the past 24 years, New Zealanders have been "fed the big lie" by both National and Labour in terms of the exchange rates and economic policy.

“We have been told that the markets are directed by rational people, whose self interest would ultimately serve the public interest. This is the big lie. The markets are reacting in an irrational manner and we are reaping the consequences of this now."

Mr Findlay says New Zealanders have lost control of our own economy and of those levers that are capable of directing it.

“We live in a democracy, yet we cannot democratically control our own economy."

Mr Findlay says the Alliance answer is to have a managed exchange rate and rewrite of the Reserve Bank Act to allow active Reserve Bank intervention.

ENDS

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