Forum Archive Index - April 2004

["Baa Baa" <baa_baa@hotmail.com>]

What is INTERVENTION?

Is is essentially the acquisition/expansion of locally held foriegn exchange 
reserves (other countries money & bonds) using Kiwi$. The market process 
sees Kiwi$ being 'sold' and others being 'bought'. This tends [or is 
intended] to convince market players to sell Kiwi$, hence drive the price 
down. Not only do the RBNZ intend to do this, they will do it and so tell 
their story for all to see on their wesbite. Link below, after my rant.

What they don't say is the extent to which they will 'print' more Kiwi money 
(create credit) which has absolutely no intrinsic value-backing -except 
perhaps misplaced public trust in the government, in order to make the 
foriegn exchange acquisitions, the corresponding effect being to .. 1. 
dilute the overall value of the Kiwi$ that ordinary Kiwis hold/earn/spend, 
and where intervention does deflate the market value, 2. depress the foriegn 
purchasing power of the Kiwi$ held by ordinary NZ'ers.

No one really thinks they can seriously intervene on a scale that has any 
material effect for any realistic length of time, but fact is they can when 
the want to. And will. Kind of weird thinking that NZ increases its foriegn 
exchange reserves from 4-5 bill $NZ (by creating new money/credit?) to 
[cough] "intervene" in a market that is liquid to the tune of 2-3 TRILLION 
US$ EVERY DAY!.

Ye gods, ROTFLMAO (roll on the floor laughing my asset off)

Foreign exchange intervention and the level of reserves - Ministerial advice 
etc. http://www.rbnz.govt.nz/foreignreserves/intervention/index.html

BAA


>From: "Baa Baa" <baa_baa@hotmail.com>
>Reply-To: sharechat@sharechat.co.nz
>To: sharechat@sharechat.co.nz
>Subject: [sharechat] Let the Intervention begin ...
>Date: Tue, 06 Apr 2004 20:15:48 +0000
>
>NZ Herald, today:
>
>" ... Late yesterday afternoon MPs voted by 84 to 35 to end the 19-year era 
>of the clean float of the New Zealand dollar."
>
>--->let the intervention begin. LOL!
>
>" ... The New Zealand dollar closed below US65 cents today, losing nearly 
>three quarters of a cent in 24 hours. The kiwi was sent lower along with 
>other counter-dollar currencies as the United States dollar continued to 
>flex its muscles in the wake of Friday's robust jobs data. The kiwi 
>finished on US64.81c - around a half a cent lower than its 2004 starting 
>level".
>
>--->on the end of a whipping hose. Ye Gods. Intervene, yeah, that's the 
>ticket!
>
>Crikey,
>BAA
>
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