New Zealand central bank intervenes to push currency down

WELLINGTON, June 18, 2007 (AFP) – New Zealand’s central bank intervened in the foreign exchange market Monday in an attempt to bring down the value of the local currency from near two-decade highs, market sources said. The New Zealand dollar fell from 75.45 US cents in early Monday trading to around 75 cents after the central bank starting selling the kiwi, the sources said.

But by the end of local currency trading, the dollar had regained all its lost ground to be at 75.47 US cents.

A spokeswoman for the Reserve Bank of New Zealand (RBNZ) refused to confirm whether the bank had intervened.

Macquarie Bank senior economist Brian Redican said the central bank was trying to undermine bullishness about the local currency.

“The more uncertainty that the RBNZ can create in this type of environment, it means that traders will be a little bit more cautious about continuing to bid up the NZ dollar,” he said.

The central bank was unlikely to begin intervening regularly but was indicating it could step in from time to time, he said.

On Monday last week, the central bank intervened in the market for the first time since the currency was floated in 1985, saying the local dollar was at exceptionally an