The New Zealand dollar climbed to $0.561 on Thursday after having dropped as low as $0.556 overnight, its weakest level since April 2025. The initial decline followed stronger-than-expected US CPI data, which bolstered the US dollar and led markets to increase bets on another Federal Reserve rate hike later this month, as well as a further rise in December.
On the domestic front, although the Reserve Bank of New Zealand has resumed its monetary tightening cycle, the official cash rate still sits noticeably below policy rates in several major economies, including the US and neighboring Australia. This interest rate gap has reduced the kiwi’s appeal for yield-seeking investors. Sentiment toward the currency has also been dampened by a sluggish economic backdrop and ongoing political uncertainty.
Attention now turns to New Zealand’s third-quarter CPI report, due next week, which will be closely watched for signals on the future path of interest rates. It will be the final key data release before the RBNZ’s next policy meeting on October 28.
