It hit a new five-year high yesterday.

Reserve Bank acting economist Tim Ng said any currency intervention would only work at the margin. Since the global financial crisis, movements of currency across borders did not look to be attached to the fundamentals of an economy, he said, as much as a search for safe havens.  “It may be that on occasion central banks transacting in the market can draw attention to the fundamentals but there are costs and you’re putting taxpayer funds at risk.”

Intervention had a massive carry cost, he said. “As a central authority in charge of taxpayer funds, they have to be very mindful of that.”

Bevan Graham, AMP’s chief economist, said intervention would have no lasting effect on the exchange rate. “It might take the top off or lift the bottom but that assumes you know where the top or bottom is. That’s pretty hard to do. Fundamentals will dictate where the exchange rate is going, and that may not even be your fundamentals.”

Graham said there was a perception that the New Zealand dollar had been a victim of international currency wars. But he said had other countries not implemented quantitative easing, the resulting global depression would have been even worse for exporters than the high dollar.

New Zealand is sometimes referred to as the world’s 10th-most traded currency but former Reserve Bank governor Don Brash said the trade in the NZD was only 0.8% of global forex trading.  That was roughly the same as the Norwegian kroner and less than the Swedish. “The peak appreciate of the NZD over the past 10 years is almost exactly the same as the Canadian dollar, less than the South Korean won and much less than the yen.”

And OCR cuts might not be the answer, either, Brash said. He said during 2000, every time the OCR was cut the Kiwi dollar appreciated in value.