FX.co ★ New Zealand Dollar Hovers at 4-Month Low

The New Zealand dollar held near a four-month low around $0.572, pressured by mounting concerns that the Middle East conflict could trigger a prolonged energy shock and darken the country’s economic outlook. The Reserve Bank of New Zealand has warned that the economy is particularly exposed to surging energy costs, which are likely to lift inflation while further squeezing household purchasing power. Governor Anna Breman reiterated that the RBNZ would look through short-lived, energy-driven spikes in inflation, but signaled that interest rates could still rise if those price pressures begin to undermine longer-term inflation expectations. In money markets, traders currently assign only a modest probability to a rate hike in April, but are pricing in roughly a 50% chance of an increase in May. On the data front, New Zealand business sentiment deteriorated sharply in March, tumbling to its weakest level since mid-2024—when the economy was in recession—as the ongoing conflict weighed heavily on expectations for future earnings and investment.