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RBNZ ready to pull the trigger - Nomura

FXStreet (Bali) - Following RBNZ's formal statement aimed at jawboning the NZD lower, Charles St-Arnaud, Economist at Nomura, notes that the Central Bank has now signaled an increased willingness to intervene in the FX market to depreciate the currency.

Key Quotes

"We believe that today‟s statement signals an increased willingness for the RBNZ to intervene in the FX market to depreciate the currency. As such, today‟s statement was likely aimed at accelerating the convergence to lower fundamentals, but we believe that the RBNZ stands ready to conduct direct operations in the FX market if NZD were to stop depreciating."

"Another point to note is that today‟s statement comes ahead of next week‟s release of the RBNZ‟s FX transaction report for August. Some commentators have suggested that the central bank may have conducted some small operations during the month and the RBNZ may be preparing the market for such news."

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