Not only does depreciation cushion the incomes of sectors exporting goods and services priced in foreign currency, it also acts powerfully and in the right direction to encourage the reduction of national debt and re-balancing of sectoral demand that is needed in New Zealand, as a deficit-running country.
As a small, open economy with flexible product  BIS Review 11/2009  13  and labour markets, we should be better positioned than many others to re-orient production and income generation in response. Figure 10. New Zealand TWI 4  Source: RBNZ. However, there are also some negative features about New Zealand’s situation.