Kiwi Dollar Falls to Lowest Since November 2025

The New Zealand dollar slipped to around $0.562 on the first day of October, hitting its lowest level since November 2025, as broad-based US dollar strength continued to weigh on the currency. The greenback was supported by a sustained rise in US Treasury yields, with elevated oil prices fueling concerns over persistent inflation and reinforcing expectations for further rate hikes by the Federal Reserve. For the same reason, markets have also increased bets on another Reserve Bank of New Zealand rate hike at its October meeting. However, support from rising RBNZ rate expectations has been outweighed by the broader rise in US yields and expectations for tighter Fed policy, keeping the US dollar robust. The prolonged conflict in the Middle East and its inflationary impact also pose risks to New Zealand’s economic recovery, further weighing on sentiment toward the currency.

The New Zealand dollar edged up to $0.565 but remained near a three-month low and was on track for a monthly decline. The kiwi started September tough, partly as the Reserve Bank of New Zealand signaled a less hawkish rate outlook than markets had anticipated. It was further weighed down by a strengthening US dollar amid rising expectations for more Federal Reserve rate hikes. More recently, however, the spike in oil prices has increased upside risks to inflation, which prompted traders to ramp up bets on another rate hike at the RBNZ's next meeting in October. Governor Anna Breman also warned last week that persistently high oil prices could push near-term inflation above the central bank’s latest forecast. Meanwhile, data out today showed New Zealand’s business confidence weakened in September, dented by a surge in fuel prices, highlighting the challenges facing the economy. The kiwi has fallen more than 4% this month and about 0.4% over the quarter.

The New Zealand dollar traded around $0.566, its lowest level since late June, weighed down by a firm US dollar. A run of robust US economic data and hawkish remarks from Federal Reserve officials has strengthened expectations for further rate hikes, supporting the greenback. Meanwhile, President Donald Trump’s rejection of an Iranian proposal to reopen the Strait of Hormuz pushed oil prices higher, raising inflation concerns that could prompt further monetary tightening by global central banks. At home, markets largely expect the Reserve Bank of New Zealand to deliver a third rate hike in October, after Governor Anna Breman warned last week that persistent increases in oil prices could push near-term inflation somewhat above the central bank’s latest forecast. However, the US dollar’s strength amid a hawkish Fed outlook continued to outweigh support from rising RBNZ rate-hike expectations.