30 March 2004

Reserve Bank foreign exchange intervention principles

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

This follows the Reserve Bank recommending, and the Government resolving, that the Reserve Bank should have the financial capacity to undertake foreign exchange interventions designed to influence the value of the exchange rate.

Reserve Bank Governor Alan Bollard commented "This letter lays out the objectives and parameters that the Bank will apply when making decisions about foreign exchange intervention. An important consideration in preparing these principles was the preservation of the Reserve Bank's operational independence in relation to the implementation of monetary policy. In issuing this letter, the Reserve Bank is continuing its long standing practice of being transparent and accountable for its decisions."

In addition, the Reserve Bank and the Treasury later today will be placing on their websites (www.rbnz.govt.nz & www.treasury.govt.nz) their recent advice to the Minister of Finance on these matters.

For further information contact
Paul Jackman
Head of Corporate Affairs
Ph 04 471 3671, 021 497 418, Jackmanp@rbnz.govt.nz