Mr Key indicated the Government is considering what can be done about the ongoing problem of a high dollar.
Mr Key is in Indonesia on a trade mission with almost 30 delegates representing New Zealand export companies.
Dow Jones reported the Prime Minister told the chairman of the Indonesian Economic Committee the New Zealand dollar was overvalued.
"We still want the markets to normalise. We've been overvalued for a few days, but we're considering what we can do to resist a rising exchange rate," Dow Jones reported Mr Key as saying.
The Prime Minister's comments took some steam out of the dollar yesterday but BNZ currency specialists believed the comments amounted to nothing more than "jaw-boning".
The high level of the currency was a reflection of the fact New Zealand's economic growth was expected to outpace that of the United Kingdom, European Union, United States and Japan this year, something Mr Key had noted, the BNZ team said.
In March, Reserve Bank governor Alan Bollard said the high dollar was reducing the need for him to lift the official cash rate from its current low of 2.5%.
Most economists believe no lift in the OCR will come before Christmas.
The New Zealand Manufacturers and Exporters Association has long called for intervention into the currency which has been sitting above US80c since January 18.
The ASB said the dollar could hit a peak of about US90c by next March, as the global economy improved and interest rate rises loomed.
Association chief executive John Walley said Mr Key's comments were encouraging.
"Clearly, when Statistics New Zealand finds that 37% of exporting firms identify exchange rate volatility as a barrier to generating overseas income, and 34% identify the exchange rate level as a barrier, we have a serious problem.
"Any action to reduce this impact will be welcomed by exporters."
The Swiss had shown what could be achieved in a short space of time with deliberate and committed currency intervention, Mr Walley said.
The decision to leave the New Zealand currency untouched, while most competitors had taken measures to reduce the value of their currency, had been disastrous for New Zealand's "real economy".
The current account balance should be the target of exchange rate action, he said.
"We must generate a current account surplus to emerge from our debt problems unscathed. A more stable, competitive exchange rate is a precursor to growth in the real economy which will push our current account towards surplus," Mr Walley said.
Green Party co-leader Russel Norman called for a national discussion about measures that could stabilise the exchange rate to levels at which the export industry could thrive.
"The Government's short-term interests favour a higher exchange rate - one that keeps imports cheap while ignoring the longer-term structural damage high exchange rates have on our economy."
Dr Norman proposed some possible measures for addressing the high exchange rate but warned there was no quick fix.
Pressure on the exchange rate and the export sector could be achieved by empowering the Reserve Bank with a mandate beyond inflation to include exchange rate levels and volatility.
That could include macro-prudential measures like requiring banks to raise more capital onshore.
Instituting a tax on capital gains - excluding the family home - would also ease upward pressure on the exchange rate, Dr Norman said.
ASB economist Christina Leung expected the value of the dollar would remain elevated in light of the recent improvement in the global economic outlook.
"While the recent problems in Spain have reminded markets that the European debt crisis is far from over, measures by the ECB to ease liquidity pressures have supported market sentiment.
"As a result, there is still an appetite for higher yielding assets, such as New Zealand's dollar, and this will likely continue to underpin the strength."
Also supporting the dollar would be relatively high export commodity prices, despite some easing recently, and continued reinsurance inflows, Ms Leung said.
