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Disclaimer: The information on this web site is issued by the New Zealand Debt Management Office (NZDMO) for informational purposes. It does not contain and is not an invitation or offer to buy or sell securities. Each page on this web site must be read in conjunction with the disclaimer at http://www.nzdmo.govt.nz.
Foreign-Exchange Rates and Overseas Reserves
The New Zealand dollar has floated freely since March 1985. There are no exchange controls on foreign-exchange transactions undertaken in New Zealand, either by New Zealand residents or non-residents. Since the float, the Reserve Bank has held foreign reserves for the purpose of intervention in a crisis situation, when there may be no ‘market makers' in the New Zealand dollar.
In 2004, after consultation with the Minister of Finance, the Reserve Bank gained the capacity to intervene in the foreign-exchange market to influence the level of the exchange rate for monetary policy purposes. The Bank has noted that such intervention may occur when the exchange rate is exceptional and unjustified on the basis of economic fundamentals and when doing so is consistent with the Policy Targets Agreement. The Bank confirmed that it had intervened for this purpose on 11 June 2007 but does not generally comment publicly on such activity.
The Reserve Bank announced further changes to its financing and management of New Zealand's foreign-currency reserves in July 2007. Since the float in 1985, the Bank's foreign-currency assets had been fully matched by foreign-currency liabilities. Under new arrangements, the Bank holds some portion of its foreign reserves on an un-hedged basis - known as an "open FX" position. This means that part of the foreign reserves portfolio will be funded in New Zealand dollars rather than in foreign currencies.
The Bank's guidelines for operating in the foreign-exchange market have also been modified. Overt intervention intended to affect the exchange rate directly can still occur. In addition, the Bank is able to more gradually accumulate or reduce its foreign-exchange position when the exchange rate is at extreme levels and unjustified by medium-term economic fundamentals. The Bank's more passive foreign-exchange transactions will not necessarily be expected to directly affect the exchange rate.
US$ Per NZ$
Yen per NZ$
Exchange Rate Index (1)
(1) The Trade-Weighted Exchange Rate Index is calculated on the basis of representative market rates for a basket of currencies representing New Zealand’s major trading partners. On 30 June 1979, the basket equalled 100.
- Trade-Weighted Exchange-Rate Index
- Sources: Statistics New Zealand
New Zealand's official external reserves, as shown in the following table, include the net overseas assets of the Reserve Bank, overseas domiciled securities held by the government and the reserve position at the International Monetary Fund (IMF). New Zealand's quota at the IMF was Special Drawing Rights (SDR) of 895 million as of 30 June 2009 (approximately $2,126 million).
|(dollar amounts in millions)|
|Last Balance Day in June||
(1) Comprises foreign-exchange reserves and overseas investments of the Reserve Bank of New Zealand.
(2) Equal to New Zealand’s quota, less its New Zealand currency subscriptions and any reserve tranche drawings.