Fed Creates $15 Billion Swap Line With New Zealand Central Bank

By Scott Lanman

Oct. 29 (Bloomberg) -- The Federal Reserve authorized a $15 billion swap line with New Zealand's central bank to provide U.S. dollars in the country, the 10th such currency-exchange program aimed at easing the worldwide credit freeze.

The U.S. central bank authorized the swap facility with the Reserve Bank of New Zealand through April 30 ``to address ongoing, elevated pressures in U.S. dollar short-term funding markets,'' the Fed said in a statement in Washington. The program ``is designed to help improve liquidity conditions in global financial markets.''

The Fed authorized a $10 billion swap line last month with Australia's central bank, then tripled it to $30 billion. Earlier this month the bank removed limits on four of the swap lines, including one with the European Central Bank.

The New Zealand dollar rose to 56.95 U.S. cents at 10:15 a.m. in Wellington, from 56.42 cents immediately before the announcement.

``There is no need to use the facility right now,'' Reserve Bank of New Zealand Deputy Governor Grant Spencer said in a statement issued in Wellington. ``It is useful to have this capacity if markets become dysfunctional.''

To contact the reporter on this story: Scott Lanman in Washington at slanman@bloomberg.net