FX.co ★ NZ Dollar Approaches Multi-Year Lows

The New Zealand dollar fell to approximately $0.557 on Monday, extending a decline of over 3% from the previous trading session and approaching historic lows. This downturn was primarily influenced by prevailing risk-off sentiment in the markets. The decline came in the wake of the United States announcing unexpectedly elevated tariffs last week. The move has prompted retaliatory actions from major global economies, heightening concerns of an international trade conflict. Such a scenario is particularly worrisome for New Zealand's economy, which heavily relies on exports. The situation is exacerbated by steep tariffs imposed on nearly all goods from China, New Zealand’s largest trading partner, bringing the total duties to 54%. Domestically, focus shifts to the Reserve Bank of New Zealand's policy meeting on Wednesday, with a 25 basis point rate cut broadly expected. This could potentially reduce the cash rate to 3.5%, reflecting the backdrop of moderating inflation, declining annual growth, and signs of weakness in the labor market.