Foreign exchange intervention and the level of reserves - Ministerial advice etc.

These materials relate to the Government's 2004 decision to increase foreign reserves and to provide the Reserve Bank with the capacity to use foreign exchange intervention as an additional monetary policy tool.

The material covers advice given to the Minister of Finance and Cabinet, along with associated Bank press releases.

Dates refer to when the material was provided to the Minister of Finance and Cabinet rather than the date of public release.

Where text has been deleted this is indicated by [.......].

Advice to the Minister of Finance recommending an increase in the level of reserves

9 February 2004

The appropriate level of foreign reserves Also available as a PDF (282 KB)

A paper from the Reserve Bank to the Minister of Finance recommending an increase in the level of foreign reserves required to combat extreme market disorder.

Advice to the Minister of Finance on a new foreign exchange intervention approach

1 March 2004

Advice to the Minister of Finance recommending that, as one of its monetary policy implementation tools, the Reserve Bank should have the capacity to intervene in the foreign exchange market to influence the level of the exchange rate. Three papers were provided as part of that advice:

Cover note summarizing the Bank's main recommendations. Also available as a PDF (75 KB)

Executive summary of the Bank's main paper on foreign exchange intervention Also available as a PDF (192 KB)

Main background paper on new approaches to foreign exchange intervention. Also available as a PDF (343 KB)

25 March 2004

Correspondence with the Minister of Finance confirming arrangements for the increase in foreign exchange reserves, capital, the section 17 standing direction, and the new policy for the Bank to have the capacity to intervene in the foreign exchange market to influence the level of the exchange rate. Four papers were provided as part of that advice:

Memorandum to the Governor of the RBNZ. Also available as a PDF (77 KB)

Memorandum to the Minister of Finance on foreign exchange intervention. Also available as a PDF (97 KB)

Letter to the Minister of Finance on foreign exchange market intervention policy on 30 March 2004. Also available as a PDF (90 KB)

Cabinet papers on foreign exchange intervention

18 March 2004

Cover letter. Also available as a PDF (80 KB)

Cabinet paper on foreign exchange intervention and increased crisis reserves. Also available as a PDF (159 KB)

A paper prepared for the Minister of Finance for discussion at cabinet on the Bank's recommendations to increase foreign reserves and to adopt foreign exchange intervention as a new monetary policy tool.

Other papers provided to the Minister of Finance

23 February 2004

The Reserve Bank of Australia's approach to intervention. Also available as a PDF (90 KB)

A briefing paper provided to the Minister of Finance on the Reserve Bank of Australia's approach to foreign exchange intervention.

Treasury papers on foreign exchange intervention and foreign reserves

Rserve Bank exchange rate intervention capacity - Information release.

Other related material

News Release – Reserve Bank foreign exchange intervention principles.

30 March 2004

The Reserve Bank today released a letter from the Bank to the Minister of Finance outlining how it intends to undertake foreign exchange market intervention.

Speech excerpt on the Reserve Bank's exchange rate intervention proposal.

25 March 2004

Speech excerpt from a presentation to the Meat New Zealand Annual Conference in Whangarei by Deputy Governor Adrian Orr

FX intervention background paper. Also available as a PDF (27KB)

17 March 2004

Background information on the Reserve Bank's proposal to extend the purpose for which it holds foreign exchange reserves.

News Release - Capacity to intervene in foreign exchange market proposed.

11 March 2004

The Reserve Bank has provided advice to the Minister of Finance recommending that, as one of its monetary policy implementation tools, it should have the capacity to intervene in the foreign exchange market to influence the level of the exchange rate.