The Bank does this by forecasting liquidity based on information provided to it by the NZDMO and the larger government departments (such as Ministry of Social Development, Ministry of Health and Ministry of Education).
The NZDMO assists the Bank by ensuring that the government departments responsible for about 95 percent of the government's receipts and payments provide the Bank with forecasts of their transactions in a timely manner.
The NZDMO has various bond maturity dates along the yield curve.
After consultation with NZDMO, about six to 12 months prior to maturity, the Bank will normally advise the market that it is prepared to receive offers from them for the purchase of the bond.
4) The precise relationships between security prices and yields are given by the Treasury bill and government bond price formulae available on the NZDMO
The Reserve Bank intends to continue to use the NZDMO to provide foreign currency funds in situations where it is sensible on a whole-of-Crown basis to do so.
The change in ALM strategy means that the balance sheet assets and liabilities no longer match by function--for example, the amount of NZDMO FX loans has reduced as loans have matured and been replaced with long term currency and interest rate swaps, whose funding source is NZD provided from currency in circulation and settlement account liabilities.
Figure 1 The Reserve Bank of New Zealand balance sheet Assets Liabilities and equity Foreign reserve Foreign reserves assets (non-NZD) liabilities (non-NZD) * F/X loans from NZDMO Domestic market Settlement accounts (NZD) assets (NZD) * F/X assets (hedged) * Crown account * Reserve repo/NZD * Commercial bank accounts securities Reserve Bank Bills (NZD) Investment portfolio Currency in circulation (NZD) * NZ govt securities Equity and retained * Other investments earnings (NZD) Figure 3 Stylised exchange rate cycle and FX management zones Relevant Criterion Exchange Rate Exceptional Unjustified PTA Consistent Potential Squaring Up x x of discretionary position zone Passive Reserve [check] [check] ?
The Bank does this by forecasting liquidity based on information provided to it by the NZDMO and the larger government departments (such as the Ministry of Social Development, the Ministry of Health, and the Ministry of Education).
The NZDMO assists the Bank by ensuring that the government departments responsible for approximately 95 per cent of the government's receipts and payments provide the Bank with forecasts of their transactions in a timely manner.
On those occasions, the NZDMO makes the decision to accept or reject bids.
When the NZDMO organises the bond tender programme, it selects bond maturity dates along the yield curve.