New Zealand Dollar Rises on Weaker Greenback

The New Zealand dollar traded around $0.564, its lowest level since November 2025, as the sustained strength of the US dollar continued to weigh on the currency. The kiwi has been particularly affected by the US Federal Reserve's hawkish stance, which has further boosted the greenback. Investor risk appetite has also weakened amid a reversal in sentiment toward semiconductor and AI-related stocks, contributing to broader market declines. Moreover, falling oil prices amid progress in US-Iran talks reduced inflation concerns, prompting investors to pare back expectations of interest rate hikes from the Reserve Bank of New Zealand. A July increase is now priced at 66%, down from more than 80% the previous week, with only two moves seen this year instead of three. The kiwi has fallen more than 1% so far this week and is on track for a second consecutive weekly loss.

The New Zealand dollar fell to around $0.570, the lowest in 2-1/2 months, as a firm US dollar outweighed easing Middle East tensions. The greenback strengthens amid increased bets on a US rate hike following the Federal Reserve’s hawkish signals. Meanwhile, US–Iran talks in Switzerland have made encouraging progress, with technical-level discussions set to continue this week, easing earlier concerns after President Donald Trump again warned of strikes on Iran over its support for Hezbollah. New Zealand’s GDP data released last week suggested that economic recovery was gaining momentum. However, the figures largely reflected conditions prior to the escalation in Middle East conflict. As a result, forecasts show GDP to barely grow or even contract in the second quarter. Markets continue to price in a 25-bps hike in July given the RBNZ’s hawkish outlook, though swap pricing imply only two increases this year rather than the three previously expected.

The New Zealand dollar dropped to $0.573, hitting an over two-month low, pressured by a stronger US dollar following the Federal Reserve's hawkish hold. Losses were partly offset by improving risk sentiment after the US and Iran remotely signed a memorandum of understanding to end their war. On the data front, New Zealand’s economy grew 0.8% in the March 2026 quarter, following a 0.5% expansion in the prior quarter but missing the Reserve Bank’s 1.0% forecast. Annual GDP rose 1.5%, beating market expectations of a 1.1% rise. While the data suggested economic recovery was gaining momentum, it largely reflected conditions before the escalation of the Middle East war. Forecasts now show GDP to barely grow or even contract in Q2. Still, traders continue to price in a 25 bps hike in July given the RBNZ’s hawkish outlook, though swap pricing now imply only two increases this year rather than the three previously anticipated. The kiwi is down more than 1% so far this week.