The Reserve Bank bought a net NZ$90 million of Kiwi currency in May, partly reversing some of the sell-offs of the currency it has recently conducted.
The figures were released on the Reserve Bank website a short time ago.
Reserve Bank Governor Graeme Wheeler said in a speech earlier late last month that the bank was "prepared to scale up our foreign exchange activities if we see opportunities to have greater influence". In April the bank sold a net NZ$256 million of Kiwi currency.
Wheeler said earlier in May the bank had intervened in a limited way in April to knock the top off the rally in the currency, which has since then been sinking against the US dollar.
May's net buying of Kiwi currency was the largest amount bought by the central bank since March 2011.
The April intervention was the largest since it sold NZ$511 million in May 2008 under previous governor Alan Bollard. The Reserve Bank sold NZ$2.25 billion in its first two months of larger scale intervention in June and July of 2008, including a record NZ$1.489 billion in July 2008.
The last major Reserve Bank intervention was in late 2007 and early 2008 under the previous Labour Government. Back then the Reserve Bank sold NZ$3.9 billion of New Zealand dollars in the year to May 2008.
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3 Comments
Hmmm - not to say you are mistaken, but the outstanding net currency amount has risen, not fallen, given that we suppose the RBNZ bought $KIWI, sold foreign currency. So, without a bench mark valuation attached to the recent increasing NZD value of the remaing foreign currency position we remain in the dark.
Might it be better for all if you challenged Spencer's rather ill-informed lock down on news releases surrounding the individual actions connected to the rather larger amount of "outstanding foreign exchange swap commitments" - the recent changes in $KIWI purchase and sale amounts may have more to do with changing collateral demands surrounding these swap positions? But we will never know.
Does indeed seem strange, as Stephen Hulme has noted above, given the Wheeler statement in June saying the NZD remains overvalued. Why would he buy Kiwi dollars in May? I can understand a relatively trivial amount of exchange gains he could report on his earlier foreign purchases; but that's hardly important, given that he is now giving very mixed signals. Did some counterparty ask him to unwind some position? The US for example? Not sure how that all works.
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