The bank had previously intervened in mid-2007 and again six months later, selling around $4 billion over the two periods.
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After the first intervention episode the exchange rate fell about 10 per cent on a trade-weighted basis. The impact of the second is harder to gauge as the global financial crisis soon followed, sending both export commodity prices and the kiwi lower.
Governor Graeme Wheeler fired another shot across the market's bows last Thursday, putting out a statement confirming his frustration that the exchange rate had yet to materially respond to the sharp fall in some export commodity prices - in particular a 45 per cent decline for dairy products since February.
He pointedly reminded the market that when the kiwi had depreciated in the past, the falls had been steep, averaging 28 per cent peak to trough, including falls of 10 to 12 per cent in the first year.
Prime Minister John Key, a former global head of forex for Merrill Lynch, said he agreed with the governor that the dollar is overvalued at current levels.
Asked what fair value for the kiwi would be he said: "I don't know, [US]65c maybe."
But he added that "just because I might think that is just about the rate that works for exporters doesn't mean that that's where it will get to".
Key said he had never been of the view that intervening in the market to turn around an exchange rate that was supported by fundamentals worked.
"What does work is targeted intervention at times at which the currency is is overcooked or undercooked."
Westpac chief economist Dominick Stephens said the important information yesterday was the confirmation that the Reserve Bank is willing to intervene at times when the New Zealand dollar's level is seen as unjustified and when market conditions are ripe for a successful intervention.
"In that light, we wouldn't be surprised to see further selling over following months, though there have been no rumours of such during September," Stephens said.
"Market conditions are clearly opportune given that sentiment has turned sharply against the commodity currencies and in favour of the US dollar. And the surprise statement released by the Reserve Bank last Thursday suggests that it still sees the New Zealand dollar as unjustifiably high even after the fall in the currency to date."
ASB chief economist Nick Tuffley said the central bank was being more activist in its attempts to pull down the currency both by talking more forcefully about the unsustainability of the high New Zealand dollar and keeping the market off-balance.
"These actions are intended to have market participants realise that a higher New Zealand dollar is not a one-way bet," Tuffley said.
"The bank has been pragmatic about the effectiveness of active intervention. But it is, nonetheless, having some success in reinforcing the downward trend in the New Zealand dollar that has been in place since July.
"We don't rule out further tactical actions from the Reserve Bank to keep downward pressure on the dollar. Now that it is trending down, it is easier to reinforce that trend than fight against an upward trend."
