(Bloomberg) -- The Reserve Bank of New Zealand’s balance sheet has shrunk to its smallest in more than three years as the central bank continues to reduce its holdings of bonds bought during the pandemic.
Total assets declined to NZ$82.7 billion ($51 billion) at the end of August, the RBNZ said Friday in Wellington. That’s the lowest since May 2021 and down from a peak of NZ$104 billion in early 2023.
The central bank has been tapering its balance sheet with the gradual sale of bonds bought under its Large Scale Asset Purchase program, the quantitative easing it employed to support the economy during the Covid-19 shock. The program ended in July 2021 and the RBNZ began selling the bonds back to the Treasury a year later.
Today’s disclosure shows the value of LSAP-related bonds has dropped to NZ$29 billion from a peak of almost NZ$59 billion when the program ceased.
The value of the Crown indemnity for the LSAP bonds — which is also carried on the RBNZ balance sheet — has declined to NZ$3.5 billion.
At the same time, the bank’s foreign currency investments have increased to NZ$11.4 billion after falling below NZ$5 billion in early 2023. The RBNZ began building its foreign reserves after a change in policy designed to increase the bank’s ability to intervene in financial markets.
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