The New Zealand dollar has appreciated to approximately $0.585, marking its third consecutive session of gains and reaching its highest point since late September. This movement is largely driven by investor speculation about a possible interest rate hike from the Reserve Bank of New Zealand (RBNZ) in the coming year. Recent economic data indicates a rebound in the third quarter, underscoring signs of a modest recovery after a prolonged phase of sluggish activity. These developments have bolstered expectations for a rate rise, with current market assessments assigning around a 45% likelihood of such a move by July. Additionally, the kiwi dollar's strength is partly due to the weakening of the U.S. dollar, amid anticipations of further monetary easing by the Federal Reserve.
Despite this optimism, there remains uncertainty regarding the RBNZ's future rate decisions. The economic recovery is fragile, predominantly supported by the primary sector rather than a robust domestic demand. RBNZ Governor Anna Breman has also signaled that interest rates are expected to remain stable for the foreseeable future. Looking ahead, the New Zealand dollar is projected to achieve an annual gain exceeding 4% in 2025.
