Govt can't be a pacifist in a currency war

The Government today passed over a huge opportunity to empower the Reserve Bank to take the pressure off the overvalued New Zealand dollar by signing a weak Policy Target Agreement with the new Reserve Bank Governor, said the Green Party.

"The Government's continued failure to act on our sky-high dollar while other countries devalue theirs will mean New Zealanders will pay the price in lost jobs," said Green Party Co-leader Dr Russel Norman.

"A significantly revised Policy Target Agreement could have sent a strong signal to the Reserve Bank to become part of the solution to our over-valued exchange rate.

"While the Key Government is obsessing over micro-economic reforms, the macro-economic reality of an overinflated dollar is killing our manufacturers and costing Kiwis jobs.

"Our trading partners are actively working to devalue their currencies leaving the kiwi dollar at record levels.

"You can't be a pacifist in an international currency war."

Dr Norman said that the Government should be taking a more pragmatic approach to economic management, protecting our export sector, rather than ignoring what is going on around the rest of the world.

"The Global Financial Crisis has changed all the rules. It's time to adapt our monetary policy to suit," Dr Norman said.

"The Government should be adopting the modern monetary policy tools that other countries are using to drive their exchange rates lower without inducing inflation.

"When will our Government come home from their long golfing holiday on planet Key?"