Our dollar has fallen a lot since 24 August. On 30 September it was down 6% against the US dollar, 3.2% against the Australian dollar and 4.8% against the Reserve Bank's basket of currencies.

A falling exchange rate does two things at once. It changes incentives and conveys information.

The incentives work as the textbooks say; buy less of what costs more. Unchanged world prices now convert into higher New Zealand prices. Exporters earn more for each sale, and tourism operators might get more overseas customers. But most of us face higher prices on unchanged incomes.

The information aspect is what should worry us. Markets appear to be telling us something unpalatable about New Zealand in particular.

First, the fall is across the board. Our dollar fell by 2.6% or more against all 17 of the currencies the Reserve Bank reports on daily.

Second, its value fell a lot against the Australian dollar whereas usually they largely move together. Its value of 81 cents Australian on 30 September is the lowest since early 2013. It averaged 90 cents over the last decade.

Neither the Reserve Bank nor Treasury saw this coming. The Bank's September projections saw the trade-weighted index averaging above 66.6, and Treasury fiscal forecasts published this week put it at 67.7. On 30 September, it stood at 64.1.

None of this need last. Currencies overshoot, and if the dollar quickly regains lost ground, little harm is done.

But there are grounds for concern. The dollar fell the most sharply in the days around the Reserve Bank’s decision on 2 September to lift the Official Cash Rate a bit. Perhaps that lift was too timid. The higher prices will concern the Bank, if the fall lasts.

The greater portion of the overall currency fall came later. One factor could be the wanton populist threat to supermarkets and others, with no finding of relevant unlawful conduct.

Other possible factors include general election uncertainty, growing public debt and continuing deficit spending. Treasury's fiscal forecasts released on Wednesday did not move the currency dial.

Budget 2024 chose a prolonged, uncertain path to end deficit spending. That created a credibility problem and the credit rating agencies have not been impressed.

The next government faces the same need to attract overseas capital because New Zealand is a large net capital importer. Governments need to think about the implications of that. Policy credibility is key.