The New Zealand dollar door took a pounding overnight, falling by over 5% against the US dollar due to local and international influences.
English told Radio New Zealand's Morning Report today that the currency, which hit a post float-high of US88.43c last month, had been too high for too long.
"More recently, as commodity prices have dropped back a bit, we would expect the exchange rate to drop because it has been pretty closely tied to commodities prices,'' he said.
"That exchange rate is coming back. Provided it does not drop precipitously, having it come back into the (USc) 70s will give our exporters, who are under pressure, some relief and the prospect that we can look forward to more growth in the future from exports, because the high exchange rate has been a pretty strong head wind for the rebalancing that needs to happen in our economy.''
The local currency fell after the weaker-than-expected second quarter gross domestic product (GDP) data on Thursday, which showed the economy grew by just 0.1 per cent over the quarter, compared with market expectations of a 0.5 per cent gain.
The falls were exaggerated later, as global risk appetite plummeted, and the US dollar broadly gained from "safe haven'' trading activity, the Bank of New Zealand said in a market commentary.
The Kiwi currently trades around US78c.
BNZ said the GDP release did nothing to undermine its view that economic growth momentum would build in the second half.
"We continue to focus on the strength of the New Zealand primary sector, which is helping to support the NZ economy relative to downshifts in growth elsewhere,' BNZ said.
The bank expected negative sentiment was likely to continue to pervade the markets. Negative global risk sentiment will continue to put downward pressure on the Kiwi, the bank said.
