KEY POINTS:
The Reserve Bank eased up on intervention in the foreign currency market last month, figures released on its website yesterday showed.
It sold a net $138 million in foreign exchange currency markets during the month, well down on the $1.5 billion it sold in July and $702 million in June, when it first used its controversial intervention power.
The kiwi was knocked down 18 per cent from a post-float high of US81.10c on July 24 to a trough of US66.37c on August 17, but has risen 14 per cent to over US75.5c.
The website figures are not a direct and complete indication of the amount spent on intervention and include liabilities of the Government's Debt Management Office.
The data also showed the central bank's net short currency position - a figure which the bank has said better reflects its currency dealings - rose to $2.6 billion from $2.3 billion in July.
In July, the bank said it would refine its foreign exchange intervention strategy, with some of its actions becoming more passive as it left a portion of its reserves unhedged, allowing it to more effectively respond to any sharp falls in the dollar.
The Reserve Bank can spend as much as it wants in selling the dollar, but can only book losses of up to $1 billion under a Government agreement. Analysts have estimated that it might have as much as $10 billion available for such an intervention.
The bank has said it will intervene when the currency is at exceptional levels, when it has a reasonable chance of success, and if it was consistent with its price stability aim.
- NZPA
