The Reserve Bank intervened to push the New Zealand dollar lower last month, selling NZ$521 million, official data released this afternoon show.
It previously intervened in mid-2007 and again six months later, selling around NZ$4 billion over the two periods.
After the first intervention episode the exchange rate fell around 10 per cent on a trade-weighted basis. The impact of the second is harder to gauge as the global financial crisis soon followed, sending both export commodity prices and the kiwi lower.
Prime Minister John Key, a former global head of forex for Merrill Lynch, said he agreed with the Reserve Bank that the kiwi was overvalued at current levels.
Asked what fair value for the kiwi would be he said, "I don't know, [US]65c maybe."
But he added that "just because I might think that is just about the rate that works for exporters doesn't mean that that's where it will get to."
Key said he had never been of the view that intervening in the market to turn around an exchange rate that was supported by fundamentals worked.
"What does work is targeted intervention at times at which the currency is is overcooked or undercooked."
- Brian Fallow of the New Zealand Herald
