Could the super fund take on the RBNZ over currency?

The possibility of the New Zealand Superannuation Fund doing a George Soros and taking on the Reserve Bank was raised at a Parliamentary select committee yesterday.

Friday, March 26th 2004, 3:25AM

by Rob Hosking

Act MP Rodney Hide questioned executives of the government-owned fund whether the recent announcement that the Reserve Bank will now play the currency markets would affect the fund’s strategy.

The size of the fund, and the fact that its principal goal is to maximise its return, means it could theoretically take on the Reserve Bank if the central bank was intervening to shift the New Zealand dollar up or down, Act MP Rodney Hide suggested.

The chairman of the Guardians of the Fund, David May, told MPs that the fund had already discussed taking a more active approach to investing in the currency, but discussion had not got much further than that.

“Perhaps this is not quite the place to be discussing this, but you could be betting against the Reserve Bank. On the one hand, or you be colluding with the Reserve Bank to move the currency in a particular direction, which would be a conspiracy."

"You are quite right, this is quite a fit subject for here," May said in reply.

Hide suggested that if the guardians of the fund – who do not direct the fund managers, but are confined to setting the broad strategy and then appointing the fund managers – were aware the Reserve Bank was moving in a particular direction, "it could help you maximise your return?"

"It would help us if we knew a lot of things…it would help us if we knew what Alan Greenspan was going to do, for instance," May said in reply.

He reiterated that the issue had not been discussed yet. The fund currently stands at $3.2 billion, and its value will rise to slightly more than $100 billion at full value, MPs were told.

For more superannuation news visit www.supertalk.co.nz

Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.

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