Reserve Bank Assets - Increasingly sensitive to Foreign Currency

Been having a look at the Reserve Bank of Australian assets after our new Treasurer, Joe Hockey decided to grant the bank a capital injection of 8.8 billion. Nice.
I was wondering why that may be the case. Reserve banks can operate with negative capital reserve if required as they can also print their way out of debt if required (though obviously not in times of higher inflation). In fact, the best time to do that might be at the moment, with inflation fairly low.

But another reason may be sensitivity to interest rates and or foreign currency. The days of Reserve Banks having gold as their main reserve has long gone. It's usually foreign currency and bonds now. So I wanted to see what affect changes of foreign currency, domestic interest rates and gold prices have on the Total Reserves.

So I regressed percentage changes in Total Assets against % changes in those other elements and got the following (Since 2005)

%TR = -0.87*%AUD/US +0.07*%10 years AUS BOND (I removed gold as it wasn't statistically significant at all)

Only the -0.87 is statistically significant at 95% confidence level. So that equates to every 1% increase in AUD/US exchange rate reduces the assets of the Reserve by almost 1% (keeping interest rates constant)

With the capital Reserve currently sitting at just over 2% of total assets, that might explain the urgency of the Capital injection (as the currency would only require 2.5% appreciation against the greenback to wipe it out)***

Maybe Joe is onto something.

**That said, the regression's adjusted RSquared is only 17%, but still goes to show that a high dollar is not the greatest thing from a Reserve point of view