23 Jul 2011

High dollar threat to growth - PM

5:47 am on 23 July 2011

Prime Minister John Key says the high value of the New Zealand dollar is threatening to dampen economic growth.

Mr Key was speaking from the United States, where he is due to meet President Barack Obama on Friday.

The kiwi hit a fresh post-float high of 86.4 cents against the greenback on Friday (NZT), and Mr Key says that is posing problems for some parts of the economy.

"Obviously it has some benefits in terms of imported components," he says. "It takes some pressure off clearly - oil prices and the likes - but we are seeing in areas like tourism, export education and some of our other areas where there's no commodity link a tremendous challenge. And we havn't seen these levels since the 70s."

Mr Key says it is critically important for the global economy that the White House and Congress reach a deal to raise the United States debt ceiling and avoid a default.

Mr Key addressed the US Chamber of Commerce about the high dollar, as part of his visit to Washington.