The deal struck in the United States to raise the debt ceiling might ease pressure on the New Zealand dollar in the short term but the underlying reasons for the high exchange rate will still be there, Prime Minister John Key says.
Speaking at his post-cabinet press conference just after the agreement in Washington had been announced today, Mr Key said the uncertainty in US financial markets had been putting enormous pressure on the exchange rate.
"But the reality is that the US still has a very heavy debt burden, quite sluggish growth and high levels of unemployment," he said.
"That is putting a lot of pressure on the US economy, and that is one of the reasons New Zealand assets have been re-rated and that position isn't changing...hopefully it will turn around."
The New Zealand dollar rose to a record 88.39 US cents today, before closing at 88.20 US cents, and Mr Key was asked whether he thought the Reserve Bank should intervene.