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The Government should respond to moves by the US Federal Reserve to purchase mortgage securities to put downward pressure on the overvalued dollar and stimulate the economy said the Green Party today.
The Federal Reserve announced overnight it will purchase $40 billion of mortgage backed debt a month to stimulate the economy and grow jobs, for as long as necessary. This is likely to result in the NZD/USD exchange rate climbing significantly, making life harder for our exporters and local manufacturers competing against imported goods.
"If the Government continues to fail to act on our sky-high dollar while other countries devalue theirs, Kiwis will pay the price in lost jobs," said Green Party Co-leader Dr Russel Norman.
"While the Key Government is obsessing over asset sales, an overinflated dollar and a faltering economy are killing our manufacturers and costing Kiwis jobs.
"Many of our trading partners are working to drive their currencies down and ours up; that will only get worse with the US embarking on a long-term policy of currency devaluation.
"You can't be a pacifist in an international currency war.
"The Government should be protecting the export sector, rather than ignoring what is going on in the rest of the world.
"The Reserve Bank should have lowered the Official Cash Rate yesterday in order to look after the real economy and stimulate jobs.
"The Government should be adopting the modern monetary policy tools that other countries are using to drive their exchange rates lower without inducing inflation.
"It is time for New Zealand to catch up with the new norm and international economic orthodoxy and ditch it 90s blinkered view, which has no solutions to our current problems," said Dr Norman.