1 Nov 2010

Key rules out action to counter dollar's rise

9:09 pm on 1 November 2010

Prime Minister John Key says the Government has no intention of intervening to try to bring down the New Zealand dollar, despite acknowledging the huge pressure the strong currency is putting on exporters.

The dollar hit its highest point against the greenback since July 2008, buying 76.7 US cents.

Mr Key says it reflects the weak American economy and action taken there to print money and devalue the dollar.

He says it is a problem facing many other countries too.

Mr Key says he has had no advice so far about the Reserve Bank increasing the cash supply in order to cheapen the New Zealand dollar.

Analysts are sure the US Federal Reserve will announce plans this week to inject up to $US2 trillion into the economy.

Latest figures also show US consumption and economic activity remained sluggish in the September quarter.

BNZ currency strategist Mike Jones says the New Zealand dollar is likely to remain in demand among currency investors because the Reserve Bank signalled interest rates will rise some time in the future.