The Reserve Bank of New Zealand yesterday confirmed that it intervened in the foreign exchange market to sell New Zealand dollars.The intervention served to reduce the exchange rate to around US75 cents from more than US76 cents earlier yesterday.Interestingly, the RBNZ chose an Australian public holiday, and obviously a Monday, as the day to act - presumably to exploit the lack of liquidity from Australia and Europe. Of course yesterday morning in New Zealand was still Sunday in America.This is the first time the RBNZ has intervened in the market for NZ dollars since the central bank and the government negotiated access to around NZ$7 billion in capital to fund such interventions. That capital comprised an increase in equity and access to foreign exchange reserves. In a statement the Reserve Bank governor Alan Bollard said that "this action does not prejudge the future direction of monetary policy, which as always will remain dependent on emerging economic trends."Bollard reiterated a point made in the statement on monetary policy last week that "we regard current levels of the exchange rate as exceptional and unjustified in terms of the economic fundamentals."The RBNZ's monetary policy - including the highest level of interest rates in the dollar bloc and the OECD - is the cause of flows of "hot" foreign investment into NZ$ securities.And having resolved three years ago to fund foreign exchange intervention and yesterday to begin to carry it out, it will be interesting to see how the RBNZ fares against the common financial wisdom that "intervention never works".