Reserve Bank of New Zealand Exchange Rate Intervention Capacity Information Release

In March 2004 the Treasury released advice to the Minister of Finance on the Reserve Bank of New Zealand's (Reserve Bank) proposal for broadening its foreign exchange intervention capacity.

On 30 March 2004 the Government announced that it supported the Reserve Bank's proposal to broaden its foreign exchange intervention capacity.

The Government agreed to contribute $1 billion of capital to the Reserve Bank to support this policy. The Government also announced that it supported the Bank's request for an additional $1.9 billion of foreign currency reserves for the purposes of intervening to combat dysfunction in the foreign exchange market.

The Government has sought Parliament's support for this broader intervention capacity and has tabled a revised Reserve Bank Funding Agreement in the House. Following ratification of the Funding Agreement the Reserve Bank will be in a position to intervene in the foreign exchange market should it choose to do so.

The report released here contains advice from the Treasury to the Minister of Finance on the Reserve Bank's proposal for broadening its foreign exchange intervention capacity.

The Reserve Bank has made additional papers available on its web site - see Reserve Bank foreign exchange intervention principles.

See also other releases by the Treasury at Reserve Bank of New Zealand Foreign Exchange Reserves and Intervention Information Releases.