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The reflation thematic has taken hold locally and globally since the end of Q4. With the recovery now more assured and central banks keeping policy easy, economists at ANZ Bank expect these trends to continue over the next two years, and that’s reflected in the forecast for a stronger New Zealand dollar. 

Key quotes

“We are in an episode like that at the moment, and while the NZD remains a ‘market darling’ and reflation remains the thematic, we expect it to continue trading at the rich end of valuations, especially with commodity prices also buoyant.”

“Given the degree of momentum in markets and the more assured domestic outlook (which is built on a foundation of successfully containing COVID-19), we have upgraded our NZD forecast and now see the NZD/USD pair gradually appreciating towards 0.77 by the end of 2021.”


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