The prices of our dairy, meat, fish, logs and other exports are down 19 per cent from May last year, in US dollar terms, according to the ANZ Commodity Price Index, and the NZ dollar is actually at the same level as then, about US80c.
Expectations have grown that central banks in the United States, Europe, Japan and China will essentially print helicopter-loads of money to try to boost their economies and lower their currencies to boost exports.
All that money will look for a home somewhere central banks aren't printing money and where interest rates are higher, ie Australasia.
Some of these central banks and sovereign wealth funds are even looking to buy government bonds in Australia and New Zealand. That's pushing up the value of our currencies relative to the underlying commodities that should be moving our exchange rate around.
The last time our currency was this overvalued was in 2007-08, and the Reserve Bank did the most profitable thing it could: it sold NZ dollars and bought assets in other currencies. It then waited for the currency to fall before buying back those NZ dollars at a lower price.
A Reserve Bank paper last month showed its currency interventions worth $4 billion have so far made net profits of $411 million. But since then its governor has been reluctant to repeat the exercise, worrying about paper losses.
That's where the Prime Minister should step in.
A former Reserve Bank of Australia board member has started murmuring about the need for Australia to print and sell its currency to offset unusual inflows from the currency-printing nations.
If the RBA moves before us, that opportunity is lost because our currency may fall in line with the Australian dollar's fall. If it doesn't, the outcome would be even worse for New Zealand.
How about it, John? Perhaps the taxpayer should promise you a bonus to juice up the prospect.
bernard.hickey@interest.co.nz
