Finance Minister Bill English agrees with the International Monetary Fund (IMF) that the New Zealand dollar is overvalued.
In its report on the New Zealand economy the IMF estimates the dollar is overvalued by between 10% and 25%.
Mr English says the currency would normally be lower at this stage of a recovery from recession, which would "fire up" New Zealand's exports.
"It's one of the reasons the economy is a bit slower than you would normally expect, coming out of a recession."
Mr English says the IMF's only advice is to make bigger cuts to spending.
But he says while the Government is holding back the growth in public spending, it is not prepared to make the cuts the IMF recommends.