They are that the exchange rate must be exceptionally high or low, the rate must be unjustified by economic fundamentals, intervention must be consistent with the Policy Targets Agreement, and conditions in markets must be opportune and allow intervention a reasonable chance of success.
For most of the kiwi's life as a free-floating currency, the Reserve Bank has adopted a hands-off approach.
The bank adopted a more active intervention policy in 2005 and modified it again in 2007. Its interventions to date have met with only mixed success.
Bank of New Zealand currency strategist Mike Jones said there were "green lights" for the first three of the Reserve Bank's conditions.
"But there is a rather large red light in the fact that an intervention would not have much chance of success in the current environment.
"It may also bring losses on the Reserve Bank's balance sheet because there is strong fundamental demand for currencies that have high yields and relatively solid economic outlooks, such as we have."
The Reserve Bank's balance sheet of $9 billion was puny given around US$32 billion worth of NZ dollars were traded on an average day.
Westpac economist Michael Gordon agreed the final condition was the sticking point.
"That's a very high hurdle and that's probably the one that has been constraining them for all this time. The issue facing the kiwi is that the Bank of Japan is looking at cranking up its [money] printing presses."
The Bank of Japan has announced it will embark on an new aggressive phase - buying long-term Japanese bonds over the next two years in a move aimed at ridding Japan of almost 20 years of deflation.
Analysts expect extremely loose monetary conditions in Japan to translate into an avalanche of support for currencies that can offer a degree of yield, such as the kiwi.
"There is going to be a massive wash of currency looking for a home somewhere around the world," Gordon said. "This is not an opportune time for a little country like New Zealand to try and fight against it."
The Reserve Bank's intervention in 2007 was not seen as a success. In the following year, the bank intervened to sell NZ dollars, but Gordon said it was difficult to determine whether it was successful because the currency was already heading down in response to the global financial crisis.
The bank sold relatively tiny amounts of Kiwi dollars in November and December last year to manage its own financial position.
The New Zealand Manufacturers and Exporters Association said the trend in the currency market was once again threatening exporters.
The association calculates that for a business selling mostly in US dollars, a one per cent change in the currency has an impact of about 10 per cent on profit.
But Westpac's Gordon said the Reserve Bank risked getting "trampled on" if it stepped in to alleviate the pressure on the export sector. "If I was an exporter, I would not pin my hopes on intervention solving the problem."
In February, when the New Zealand dollar was trading at US84.5c and at 77 on its Trade Weighted Index, Reserve Bank Governor Graeme Wheeler said in a speech that the kiwi was significantly overvalued in terms of its economic fundamentals.
Wheeler said then that the bank stood ready to intervene "when circumstances are right and to use the official cash rate as required".
Last week the kiwi hit US86.75c and dealers say a breach of the post-float record of US88.43c looks likely in the coming weeks. APNZ
