The New Zealand dollar sank after Wheeler said its strength was "unjustified" and that the currency could have "a significant fall". "Encouragingly, the economy appears to be adjusting to the monetary policy tightening that has taken place since the start of the year," Mr Wheeler said on Thursday. "It is prudent that there now be a period of assessment before interest rates adjust further towards a more-neutral level.
Mr Wheeler also noted the decline in export prices for dairy products and timber, saying that "would reduce primary sector incomes over the coming year". "With the exchange rate yet to adjust to weakening commodity prices, the level of the New Zealand dollar is unjustified and unsustainable and there is potential for a significant fall," he said.
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