By Bernard Hickey
Finance Minister Bill English has said the Reserve Bank has not yet signaled a significant intervention in the New Zealand to the government.
He was asked about an intervention of a larger scale after Reserve Bank Governor Graeme Wheeler said in a speech earlier on Thursday the bank was "prepared to scale up our foreign exchange activities if we see opportunities to have greater influence".
English made the comments just before the Reserve Bank disclosed it sold NZ$256 million worth of currency in April, confirming its comments on May 8 that it had intervened in a limited way in April. Wheeler said earlier this month the bank had intervened in a limited way last month to knock the top off the rally in the currency, which has since sunk against the US dollar. 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.
"In the long run you can't pick your currency level, but the RB has sometimes intervened to knock the peak off the exchange rate," English told reporters in parliament when asked about the prospects for larger scale intervention.
"We would expect to be briefed about that kind of risk to the Crown, if there is a risk to the crown's balance sheet, and we haven't had any discussions with them about that," English said when asked about larger scale intervention.
"We've made it pretty clear we don't believe it's worth taxpayers taking substantial risks around trying to manage the exchange rate," he said, when asked about the potential balance sheet risks of a major Reserve Bank intervention.
"We haven't had that discussion, so I couldn't comment on what he might mean by that," he said when asked about the Governor's comments about the scale of such intervention.
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.
(Updated with background, links and chart; RBNZ disclosure)
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