As Neil picked up on already there is a suggestion that the Reserve Bank of Australia is practising some "passive intervention" to hamstring the Aussie's strength a touch. It's based on the RBA's stockpiling up A$863m of foreign exchange reserves in August and September - FX reserves it would usually churn back into Australian dollars in the market. The idea is that it is holding on to the FX in order to take away a source of Aussie strength. But there is a potential difficulty attaching the label intervention, even "passive," to this build up at so early a stage that we'd like to point out. As RBC's Sue Trinh said: Intervention is transacting FX to deliberately influence the level of the exchange rate but changing level of FX reserves do not always correspond with intervention. Reserves can fluctuate for a number of unrelated reasons eg valuation effects, government transactions, imf allocation of sdrs. That seems a fair point to us, particularly when you see this run of charts, again from Trinh who makes the point that there is no real pattern here when compared to previous periods of intervention. And it's obviously not impossible that the RBA was simply building up reserves which had fallen over the previous few quarters: Said Trinh recently: The September RBA FX transactions data released last week continue to show that the RBA is transacting just enough FX to offset its government obligations, and we continue to find little evidence in these data that shows the RBA is leaning against AUD's strength. Indeed, its approach to FX intervention has evolved over the past three decades, from day-to-day smoothing in the mid-to-late 1980s to responding to episodes where the exchange rate was judged to have overshot relative to economic fundamentals in the early 1990s. And since the early 1990s, the RBA's threshold for what constituted an overshoot became much higher, such that a moderate misalignment was no longer sufficient to justify intervention. Instead, the RBA limits intervention to periods of market dysfunction, characterised by disorderly trading conditions and sharp deterioration in liquidity. This was the case in August 2007 and October/November 2008, the first intervention (to 2008 intervention, the RBA has not transacted in the FX market beyond its routine government obligations (Figure 1). The RBA has used the 22dma of the absolute daily range in AUD/USD as a measure of volatility (and liquidity). This indicator suggests that intervention is a remote possibility. Thus, while this may be a case of the RBA stepping aside in order to help the Aussie weaken, something it pretty certainly wants to see happen and is speaking out about whenever it can, there can be no certainty this move is anything bar normal reserve management. We ain't saying it definitely isn't "passive intervention." It probably is. Some more evidence would be nice though. Related links: The RBA - leaning against the wind - FT Alphaville The Aussie dollar - from South Pacific peso to Southern franc - FT Alphaville The slow rise of the FX minnows - FT Alphaville