The New Zealand dollar has fallen for five straight quarters and may test a pandemic-era low. Analysts say the kiwi could weaken past its March 2020 trough of 54.7 US cents as slowing growth undercuts the case for rapid interest-rate increases. Uncertainties from an upcoming close election may also exert downward pressure.
Much of the kiwi's fate rests on this week's inflation report, which will validate or negate aggressive pricing for further rate hikes. Swap traders are betting on more than 100 basis points of tightening over the coming year versus 40 basis points in the central bank's projection. The currency ended at 56.52 US cents on Friday, trading above the psychological level of 55 cents.
The next support lower is 54.86 cents, the April 2025 low. The central bank's model-based nowcasts indicate economic growth may slow to 0.12% in the fourth quarter from 0.40% in the previous three months. Economists in a Bloomberg survey forecast annual consumer-price gains likely slowed to 3.8% in the third quarter from 4.1%.
The Oct. 28 rate decision is.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing