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Economists at ANZ Bank believe the kiwi remains well-supported and forecast the NZD/USD pair at 0.74 by the end of the year.  

Key quotes

“While we are not forecasting a higher cash rate anytime soon, we do think that in a reflating world, markets are more likely to price policy tightening faster in New Zealand than they do elsewhere.”

“There is room for further upside in the NZD as the global backdrop continues to be supportive of pro-cyclical assets. Rising global growth, strong liquidity and lower volatility create an environment where the commodity currencies tend to perform well.”

“We think a relatively higher rate structure, booming agricultural commodity prices and a strong domestic economy are NZD-positive. We have recently lifted our forecasts track and now have the NZD reaching 0.74 by year-end.”

“The key risk to the outlook is a rapid change in global financial conditions. If rising yields generate sustained damage in equity markets, the NZD will be one of the biggest casualties in the G10 FX market.”