Reserve Bank Proposal Madness

ACT New Zealand Finance Spokesman Rodney Hide today slammed Reserve Bank Governor Alan Bollard for wanting the power to intervene in the foreign exchange market when he considered the dollar "exceptionally and unjustifiably high" or "exceptionally and unjustifiably low".

"Dr Bollard's proposal is complete madness. The Reserve Bank Governor should not be given taxpayers' money to play the foreign currency market. He should be left to play with his own money. Dr Bollard's proposal is financially and economically very risky", Mr Hide said.

"The taxpayer dollars here in New Zealand are small in number compared to the dollars washing around the world's currency markets, and it's a risky thing for a bureaucrat to be deciding when the dollar is `exceptionally' or `unjustifiably' high or low.

"Taxpayer reserves will come under threat every time either importers or exporters think that the dollar is out of whack with where they would like it to be. The lobbying upon the Reserve Bank to intervene will be intense.

"There's also the risk that currency traders will play with the Reserve Bank, making the dollar more volatile, not less.

"We don't have the Reserve Bank buying and selling houses to influence house prices. It should not be buying and selling dollars trying to influence the value of the dollar.

"Dr Bollard should stick to keeping inflation under control. And the Government should be addressing the stress put on business because of the high dollar by lowering taxes and getting rid of the red tape that's tying business up in knots," Mr Hide said.

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