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Though the strong exchange rate is a concern amid no economic growth, there is little to be done about it in the short term, New Zealand Finance Minister Bill English said in an interview on Radio New Zealand on Tuesday.
The New Zealand dollar traded higher against other major currencies during Tuesday's early trading. The kiwi is trading at 0.7039 against the greenback at 2.25 am ET, slightly below Friday's fresh 1-year high of 0.7092.
A strong currency is causing concern for exporters. English said there are other ways to help them than the central bank intervening in the currency market.
Further, English reportedly said the government would continue with its regulatory review to ensure exporters are competitive by keeping their costs as low as possible.
While deciding to leave the key interest rate at 2.5% last week, the Reserve Bank of New Zealand governor Alan Bollard said business profits are under pressure because of the low level of activity and the elevated New Zealand dollar. "This limits the scope for employment and investment to rebound quickly."
Bollard said there is need for improved competitiveness in the export sector among others to allow growth to be sustained in the medium term. He warned that if the exchange rate were to continue its recent appreciation and/or the recovery in house prices were to undermine the improvement in household savings, then the sustainability of the present recovery will be brought into question.
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