Here is what happens when serious macro managers make utterances about overvalued currencies:
This is the NZ dollar losing 0.6 of cent as Graeme Wheeler, the new head of the RBNZ, said:
“When the New Zealand dollar is coming under upward pressure, we want investors to know that the kiwi is not a one- way bet,” Wheeler said in a speech to manufacturers and exporters in Auckland.“The Reserve Bank is prepared to intervene to influence the kiwi. But given the strength of recent capital flows, we can only attempt to smooth the peaks.”
The whole speech was actually quite conservative, although it also mentioned macroprudential tools in passing.
Imagine what a concerted and steady jawboning campaign could achieve with a few policy tools threatening in the background, as well as delivered if necessary.