Asia Should Not be "Fearful" of Weak Dollar: NZ Leader

Asia should not be "so fearful" about the appreciation of Asian currencies against the U.S. dollar, New Zealand's Prime Minister John Key said on Friday.

Mister Key said that if the United States can increase its exports to Asia, the weaker dollar can actually be an advantage for regional economies.

"The Asian countries are big exporting nations at the moment - we are producing in the east and selling to the west. But if we can increase demand from the west, by making sure that they are a bit more competitive, there is a counter argument that (the weaker dollar) actually helps Asia," Mister Key said on CNBC Squawk Box Asia.

The New Zealand economy has been relatively shielded from the effects of a strong Kiwi dollar, due to the strong rebound in commodity prices, Mister Key said, "particularly the dairy prices which have seen 100 percent growth in the past three to four months."

However, he raised concerns about trade with the U.S. if the greenback continues to weaken.

"There is concern that we end up in a position that we choke off the growth in the exports, which we wanted to see in terms of getting a balanced recovery," Mister Key explained.

When asked about the danger of rising inflation, the Prime Minister said he does not see a threat in the near term.

"If you take a look at China and Japan, where there is explosion of credit growth, the inflation is still very low. But there will come a point when consumers feels more confident, when demand starts picking up," said Key, adding that governments will then have to take action to constrain some of the growth in money supply.


"So this a big challenge for central banks, but I think that's 12 months away."

Mister Key said trade will play a key role, in stimulating growth as the global economy recovers.

"The United States is borrowing a lot of money, Europe is borrowing a lot of money, everyone's got big fiscal stimulus programs going on. And at some point, that's gonna stop," Mister Key said. "The baton has to move to the private sector, and the way to do that is to get people to trading with one another."