New bid to push dollar down

Press, 18 June 1986, Page 8

New bid to push dollar down

By

MARTIN FREETH

in Wellington Exporter representatives held a second lowprofile session with Reserve Bank officials yesterday as part of their concerted bid to have the value of the New Zealand dollar pushed down. The bank’s deputy governor, Mr Lindsay Knight, later described the talks as a useful exchange of ideas on the Government’s financial policy, and problems facing exporters because of the strength of the dollar. The exporters’ group, representing the producer boards, manufacturers and farmers, now hopes to put a case to the Minister of Finance, Mr Douglas — probably next week.

Those in the group remained silent after the session about their specific proposals, apparently involving Government action to influence the New Zealano aoiiafs value without direct participation in foreign-exchange markets. The dollar hovered round U553.5C in quiet trading on the New Zealand market yesterday, after a 2 per cent fall on Monday.

The unit has now slipped almost 10 per cent from a recent peak of almost US59c on May 12, reflecting the sharp drop in interest rates over thee last two months. Mr Knight rejected speculation that an unannounced change in the bank’s monetary management recently was in part responsible for falling rates which have, in turn, taken pressure off the New Zealand dollar. The bank had been “quite consistent” in setting daily targets for the amount of cash in the monetary system, and in the broader measure of “primary liquidity” intended to maintain them, Mr Knight said. The most recent change in the bank’s daily liquidity target had been in late April, with tightening from $75 million to $5O million. “What has happened is that the demand for funds out there has changed, and that has caused rates to ease and, therefore, also affected the dollar,” Mr Knight said. Money-market dealers say foreign investors, who have previously been attracted to New Zealand by high interest rates, have shown much less

gency be accorded all stages of the Imprest Supply Bill. The Minister of Finance, Mr Douglas, moved the introduction of the Imprest Supply Bill and the bill was given a first reading. Members then began debating the bill’s second reading. The debate was interrupted when the House adjourned for dinner at 5.30 p.m. After the dinner adjournment the bill was given a second and third reading. Members then began debate on the third reading of the Education Amendment Bill (No. 2.) The bill was given a third reading. The Tasman Pulp and Paper Company Enabling Amendment Bill was passed through its committee stages. Debate then began on the second reading of the Health Benefits (Reciprocity with Australia) Bill. The bill was given a second reading. The Minister of Works and Development, Mr Colman, moved the introduction of the Town and Country Planning Amendment Bill. The debate on the bill's introduction was interrupted when the. House rose at 11 ■p.m. ■

interest recently. That has reduced buying interest in New Zealand dollars. Trading was also quiet yesterday on the Government Stock market, where the rate for five-year bonds remained about 15.2 per cent, the level set in the latest tender last Friday. Foreign exchange dealers were uncertain how the New Zealand dollar would move now, particularly under the impact of two big overseas loans denominated in New Zealand currency that will be settled this week.