27 May 2013

Govt urged to lower NZ dollar

8:47 am on 27 May 2013

The Government is being urged again to bring down the high New Zealand dollar.

The Budget has forecast export growth will lag overall economic activity during the next four years due to the dollar, pushing the current account deficit to levels that could affect the country's creditworthiness.

The Manufacturers and Exporters Association says the Reserve Bank should intervene aggressively to lower the New Zealand dollars, and help exporters struggling to compete against foreign rivals.

While the Reserve Bank and the Government concede the kiwi is overvalued, Radio New Zealand's economics correspondent reports they have rejected calls to print money to bring the currency down.

Business New Zealand agrees, saying that could result in rampant inflation and high interest rates.

It says the Government's priority on getting back to surplus and reducing debt is the right one to help exporters.

Export New Zealand says New Zealand is too small to get caught in currency wars with the likes of America and Europe through printing money, and the eventual cost in rampant inflation and high interest rates could damage the economy.

BERL economist Ganesh Nana said the Budget shows exporters will remain under the currency hammer for much of the next four years, becoming a smaller part of the economy.

Dr Nana said New Zealand cannot blame its major trading partners, many of whom are still printing money to revive their economies.