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.”
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