The Green Party is calling for direct intervention by the Reserve Bank to help bring down the New Zealand dollar.
Co-leader Russel Norman said the high dollar is hurting exporters, manufacturers and the tourism sector and New Zealand can no longer afford to be a pacifist in a currency war.
Interviewed on TVNZ's Q+A programme on Sunday, he said the Reserve Bank should be able to be take factors other than inflation into account when setting the official cash rate.
Dr Norman said the Reserve Bank should print an extra $2 billion and buy Government earthquake bonds and replenish the Natural Disaster Fund by providing money for the fund to invest in overseas assets.
He said that would help reduce the need for overseas borrowing and send a signal to the market that New Zealand is prepared to act to protect its currency.
But the Government says the Green Party's proposals are 'silly' and would dramatically increase the cost of living and ruin the country's reputation.
The Minister for Economic Development, Steven Joyce, says what's being proposed hasn't worked in Japan and Switzerland - and has only been embraced by countries in crippling debt.
He says the Government's conservative approach to economic policy has helped the country.
"We have stronger growth than most (countries in the OECD), less debt than most, and less unemployment than most, and what the Greens are suggesting is that we should the dance of the desperate and try some very unorthodox economic policies which have not been proven at all to work. It truly is silly stuff."
Mr Joyce says the Greens are panicking.
CTU backs Greens' plan
The Council of Trade Unions supports the proposal. CTU economist Bill Rosenberg said there are risks and benefits in all policies - but the current plan is not working and it's time to try something else.
He said exporters are being forced to lay off staff and move production elsewhere, and the current-account deficit is growing.
Mr Rosenberg said inflationary pressures are low, so now is the time to bring in the proposals.