We have updated our “fair value” purchasing powerparities (PPP) on the NZ dollar. And we’ve augmentedthese with due consideration of New Zealand’s boomingterms of trade. This, not surprisingly, gives a better fit tothe sorts of NZ dollar levels we’re seeing. However, theresults for NZD/AUD are not so straightforward. Theysuggest NZD/AUD has already overshot a bit on a PPPbasis and much more besides after accounting for termsof trade relativities.
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BNZ