FX.co ★ NZD Edges Lower as Investors Assess Budget

The New Zealand dollar depreciated to approximately $0.592 on Thursday, reversing its gains from earlier this week as investors assessed the implications of the nation’s newly released budget. The budget forecasts a reduced deficit of NZ$14.74 billion for the fiscal year concluding in June 2025, an improvement from the previously projected NZ$17.32 billion deficit detailed in December’s half-year fiscal update. The government highlighted its commitment to fiscal prudence, despite cautioning that the ongoing global trade war could hinder the economic recovery of New Zealand, an economy heavily reliant on trade. Last year saw a contraction in New Zealand’s economy, and its path to recovery remains fraught with challenges, particularly amid the aggressive tariff policies implemented by US President Donald Trump. In terms of monetary policy, the Reserve Bank of New Zealand is anticipated to decrease its official cash rate by 25 basis points next week. However, some investors speculate that the central bank’s easing cycle may soon conclude, with expectations that rates could drop to 2.85% by the end of the year.