15 Sep 2009

Little to be done about high dollar - English

9:11 am on 15 September 2009

There is little to be done about New Zealand's strong exchange rate in the short term, Finance Minister Bill English says.

Exporters are expressing alarm at the high New Zealand dollar, which hit 70.88 US cents in New York on Friday evening and has remained around the 70 cent mark.

Mr English told Morning Report the strong exchange rate is a concern given the economy is still not growing, but there are other ways to help exporters aside from the Reserve Bank deciding to intervene in the currency.

He says the Government can get on with its regulatory review to ensure exporters are competitive by keeping their costs as low as possible.

Economists doubt intervention

The last time the Reserve Bank intervened was in February 2008 when the dollar hit 80 US cents. A year earlier it took action when the dollar hit 77 US cents.

Westpac market strategist Imre Speizer says the dollar may surge to 74 US cents in the next few weeks, prompting the Reserve Bank to sell off the Kiwi in a bid to lower its value.

Rankin Treasury Advisory managing director, Derek Rankin, disagrees. He predicts the Kiwi will continue to rise, but any intervention is unlikely as New Zealand is at the mercy of global forces, with America actively printing money in order to weaken its currency.