The Reserve Bank of Australia (RBA) has roared back into profitability, with a $3.8 billion profit last year.

Key points: RBA turns 2017 $900m loss into a $3.8b profit this year

RBA turns 2017 $900m loss into a $3.8b profit this year RBA has made $30b profit over the past decade, largely on currency transactions

RBA has made $30b profit over the past decade, largely on currency transactions Dividend to the Federal Government down 50pc to $669m this year

It represents a $4.7 billion turnaround from last year's $900 million loss.

While losses are unusual, they are not unprecedented as the bank plays the long game in currency trading, tending to lean against the market if it thinks the dollar is over, or undervalued at any point in time.

It is in the market virtually every day providing services to its clients, the biggest of which is the Australian Government, but seldom intervenes to affect the exchange rate.

The last time the RBA intervened in the market was in 2008 at the height of the global financial crisis when the Australian dollar plunged from almost parity with the US dollar to 65 cents between July and November.

Over the next two years the RBA made a $12 billion profit by being on the smart side of the Australian dollar trade.

Indeed, the RBA more commonly is on the right side of the trade, making a net profit of around $30 billion over the past decade.

No intervention

"During 2017/18, the Bank's assessment was that trading conditions in the market were sufficiently orderly and it was not necessary to support liquidity in the market through its own transactions," The RBA said in its annual report.

"The Bank nevertheless retains the discretion to intervene in the foreign exchange market to address any apparent dysfunction and/or a significant misalignment in the value of the Australian dollar."

Any intervention is published on the RBA's website some time after the event.

The RBA made a net gain of $3 billion from securities and foreign exchange compared to last year's loss of $1.8 billion.

Its steely determination to keep interest rates at historic lows also cost a bit, with net interest income down 10 per cent to $900 million.

Commonwealth Government dividend halved

On the other side of the ledger, the Commonwealth Government was not such a big drain this year, receiving $669 million from the reserve fund, around half the $1.3 billion siphoned off in 2017.

However, over the year the RBA's balance sheet shrunk by $8 billion to $186 billion.

"The decrease in liabilities was mainly due to a decrease in deposits held by the Australian government with the Bank," the RBA said.

"These deposits are used by the government to manage the timing of its receipts and outlays, and can vary considerably over the course of a year."

As an interesting aside, there was a note in the accounts detailing how the RBA can enter the market to maintain financial stability in the banking sector.

"On 12 June 2018, the Reserve Bank conducted an additional round of dealing to address a technical issue in the payments system that arose at one of the major banks," the bank said.

The RBA injected $8.7 billion into the bank overnight through a repurchase agreement to head off an embarrassing and potentially destabilising lack of liquidity.

"Conditions reverted to normal the following day after the technical issue was resolved," the RBA said.

The Governor's total remuneration (including superannuation) rose to $1.02 million, up 2 per cent on 2017 and in line with the weak wage growth across the broader economy which is currently frustrating the RBA.