28 Jul 2011

Economy strong enough to deal with US crisis - English

6:58 am on 28 July 2011

Finance Minister Bill English says the country is in a better position than most to weather any effects of the United States' debt crisis.

The New Zealand dollar hit another post-float high against the US currency on Wednesday of 87.66 cents, following stronger than expected inflation figures in Australia, before dropping back slightly.

Mr English says the rise in the kiwi shows global investors have confidence in the New Zealand economy, which is being seen as something of a safe haven.

He says a failure by the US government to reach an agreement could lead to a stronger New Zealand currency and reduce commodity prices overseas.

However the economy has remained remarkably resilient during the global recession and the Christchurch earthquakes, Mr English says.

BNZ chief economist Tony Alexander says markets are not showing signs of panic over the US situation.

In the worst case, he says, the US government would lay off workers, the US dollar would drop and global economic growth would slow dramatically - but that is not likely to eventuate.