The New Zealand dollar held below $0.625, testing a two-year low as a weak business survey result highlighted the risk that rising interest rates would lead to recession. The latest ANZ survey of business sentiment showed nearly 63% of firms expect economic conditions to deteriorate over the coming year, due mainly to supply disruptions and surging cost pressures. This presents a challenge to the Reserve Bank of New Zealand which is expected to stick to its aggressive tightening path to bring down inflation, even if it means risking a recession. Markets are priced for another hike of 50 basis points in July to take rates to 2.50%, and for rates to near 4% by the end of the year. The RBNZ already raised the official cash rate by 50 basis points twice this year, following three 25 bps increases as the central bank acted in the face of decades-high inflation.
Historically, the New Zealand Dollar reached an all time high of 1.49 in October of 1973. New Zealand Dollar - data, forecasts, historical chart - was last updated on June of 2022.
The New Zealand Dollar is expected to trade at 0.62 by the end of this quarter, according to Trading Economics global macro models and analysts expectations. Looking forward, we estimate it to trade at 0.59 in 12 months time.