Tony Alexander

Economic Commentaries

NZD At 82 cents and Some US Debt Thoughts

Thursday September 13th 2012

This morning the Reserve Bank surprised no-one by leaving their cash rate unchanged at 2.5%. And regular readers of the Weekly Overview should also not have been surprised at them shifting out the projected date for raising the cash rate from mid-2013 to the end of the year. The next change will be into 2014.

In Europe things have gone well with the German Constitutional Court saying the Germans can participate in the bailout fund, and the ECB saying it will buy short-dated bonds of the struggling southern countries. This news plus weak US jobs data raising expectations of more US money printing has pushed the NZD to near US 82 cents. This rise in our currency is one way along with weak demand offshore in which their pain is spread to us. Such is the way of our linked world.

In China the usual batch of monthly data releases have been generally weak and debate now grows stronger regarding if and when stronger stimulus measures will be announced. Those released so far are red herrings in that the projects will either never receive funding, were already planned, or will take many years to complete. If you want to learn more about China from someone undergoing the same exercise (me) go to

In this week’s Overview I take a look at the growing interest in investing in NZ – property and shares receiving attention just below my Interest Rates section. Plus I waffle on a bit in the front section regarding how worried one should be about $16tn of US Federal Government debt.

This week’s links.

Monthly BNZ Confidence Survey results.

Results of my monthly survey of licensed real estate agents with the REINZ.

Weekly newspaper column – looking a bit at why the NZD is high.

A look at the dispute over the Diaoyu/Senkaku Islands.

Could it be that just 23% of Chinese are appreciably better off since Reform and Opening started? Some terribly rough calculations open to challenge.