Graph of the week: RBNZ's upwards currency forecasts may have reached their limit

Buried away in the back of the most recent Reserve Bank monetary polticy statement is yet another upwards revision of the exchange rate.

The central bank, it needs to be stressed very strongly, does not control the exchange rate. Any politician or commentator – and there are a few of each – who talks of being able to "control" the exchange rate should be set to one side and have their prognostications on economic matters politely ignored.

The Reserve Bank does, however, have to take the likely – or the least unlikely – path for the exchange rate into its forecasts.


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