Some central bankers might rather enjoy being mobbed by Japanese housewives. But Alan Bollard, governor of the Reserve Bank of New Zealand, may live to regret getting in the way of Japan's currency day-traders. Whether the RBNZ makes money on yesterday's currency intervention or not, it is a hard policy to justify in a small, open economy such as New Zealand's.

The central bank's sales of kiwi dollars drove the currency down by about 2 per cent against the yen and the US dollar. The RBNZ is trying to do something about the unwanted strength of the kiwi, which hit a 22-year high against the greenback earlier this month, a level that causes suffering for New Zealand's non-farm exporters.

The trouble is that the RBNZ has also had to set interest rates of 8 per cent to tackle an inflation problem. That is 16 times the level of rates in Japan, so it is tempting for all and sundry - international hedge funds as much as Japanese day-traders - to sell yen and buy kiwis.

New Zealanders should be sceptical about their central bank making the opposite bet. To start with, it is unlikely to make any meaningful medium-term difference to the exchange rate. Japanese households have about $13,000bn in financial assets; New Zealand has a few billion US dollars set aside for intervention. It is like using a nut to crack a sledgehammer.

Nor can the RBNZ simply issue a lot more kiwi dollars in order to buy more yen. It is, remember, trying to slow the economy to prevent inflation and a large boost to the money supply would not help.

There is only one argument the RBNZ can use to justify its intervention: that it intends to make a profit by beating the hedge funds at their own game. If the market responds to intervention then this kind of stabilising speculation works rather well. The central bank can sell when the currency is strong, buy when it is weak and does not even have to pay bonuses to its civil servant currency traders.

But the RBNZ does not have the funds to control the market: it is just another speculator. It might do well - the Bundesbank used to make a mark or two on currencies - or it might follow Malaysia's Bank Negara, which lost a fortune betting on sterling in 1992. Win or lose, this is not the job of a central bank. If New Zealand's citizens want to sell their currency they are well able to do so for their own accounts.

Big economies - such as Japan's - have the muscle to manage their currencies, though it is usually better not to. Small economies such as New Zealand's just have to go where the markets take them.