KEY POINTS:
National Party leader John Key does not think a dramatic fall in the value of the New Zealand dollar is imminent, despite Foreign Minister Winston Peters saying yesterday it could drop by 27 per cent.
The dollar dipped below US77c after Mr Peters' comments, made in Manila during a regional security forum.
Earlier in the day it had been trading at US77.31c after passing the US80c mark last week.
Mr Key, a former currency trader who correctly forecast several weeks ago that the dollar would hit US80c, said today the fundamental reasons for its high value were the very weak US dollar and high interest rates which were driven by the Government's plans to increase spending.
"It would take a dramatic reversal of one of those two factors, and that's unlikely," he said today on TV One's Breakfast programme when he was asked whether he thought the dollar was going to fall by as much as 27 per cent.
Mr Key agreed that the dollar was likely to continue trading in the high 70s, even though Reserve Bank Governor Alan Bollard had indicated that last week's interest rate rise was likely to be the last for a while.
"Eventually, in my view, it will go lower simply because it's doing so much damage to the New Zealand economy," Mr Key said.
- NZPA
