Tuesday, July 17, 2007

Question for the day

How much is the Reserve Bank's loss from its foreign currency interventions?

Anyone care to guess.


Adolf Fiinkensein said...

Hard to know. Are they still dabbling? The whole thing was an exercise in futility but no doubt the RB will say they'll get all our money back when the currency comes down again. Of course by then we'll have no export industry to speak of and our GDP will comprise 100% gummint expenditure.

Lefties' Nirvana.

Psycho Milt said...

Surely, however great the loss, it was worth it for the sake of keeping the dollar below US $0.76? Oh...

Anonymous said...

By my guess the paper loss is around 22 million the good Dr will have to pray to the currency gods that it dips enough so he at least breaks even

Spam said...

No - its just a non-inflationary way of reducing the budget surplus!

Anonymous said...

Err - I think you guys don't know much about currency and money
The Reserve bank is selling NZ dollars
The Reserve Bank prints NZ dollars for a fraction of the face value of the money
The Reserve Bank can print as much money as it likes and can sell it for international currency
Therefore the Reserve Bank is making a huge profit selling the NZ dollar

Anonymous said...

But printing cash increases inflation, it does not matter what they do with it, hence doing that to fund the currency intervention means that they would have to push up interest rates to fight inflation, unless Dr Bollard wanted to lose his job.

Anonymous said...

Printing cash only causes inflation if there is a surplus to requirements.
In this case there is a shortage

Kiwi Trader said...

The RBNZ has not released the extent of the intervention to date.
See: http://www.rbnz.govt.nz/statistics/rbnz/f5/data.html

Even then, we would have to guess at the rates achieved.
So not possible to work it out yet.
Overall I still think they will make significant gains on the intervention.