Cullen: It's all the US dollar's fault

Michael Cullen

Finance Minister Michael Cullen blamed the New Zealand dollar's rise on the weakness of the US dollar and to some extent the Japanese yen.

As the kiwi rose to new records above US80c against the US dollar and on its trade-weighted index, which measures the kiwi against those of its five main trading partners, he told reporters today exporters were feeling the pain.

"The story of the last couple of days is very much the story of the US dollar continuing to decline. We really haven't changed much against currencies like the Australian and so on over that period of time and nothing we can do can affect the United States dollar in coming down."

The New Zealand dollar has actually in the last year made its largest gain against the Japanese yen -- up 34 per cent against the 31 per cent rise against the greenback.

The kiwi is up 18.5 per cent against the euro, 10.5 per cent against the Australian dollar and 16.4 per cent against sterling.

The trade-weighted index is up 22.6 per cent since July 24 last year.

Dr Cullen said nobody could make predictions over whether the trend would continue.

"It's all about the US and to some extent the yen and you've heard commentary this morning around prospects maybe of people starting to move money into the yen. Who knows?"

Dr Cullen said his position remained the same on section 12 of the Reserve Bank Act where he has the power to suspend monetary policy targets agreement and incorporate other objectives.

He said he would never rule out using it.

- NZPA