NZD/USD: RBNZ to push against the perceived hawkishness if kiwi continues rising – Rabobank

After Wednesday’s surge, the New Zealand dollar is that the fourth-best performing G10 currency within the year so far , after the CAD, GBP and therefore the NOK. The Federal Reserve Bank of latest Zealand is hinted at the likelihood of a post-pandemic rate of interest hike. However, Governor Orr could plan to push against the perceived hawkishness of the RBNZ if the worth of the NZD continues to understand, economists at Rabobank report.

See: NZD/USD to ascertain considerable gains toward 0.78 as RBNZ signals policy tightening – CE

Cash rate forecasts illustrate the primary 25 bp hike in Q3 2022
“The RBNZ has made clear that any rate hike are going to be ‘conditional on the economic outlook’. Additionally, Governor Orr signalled a willingness to stay vague by commenting that ‘who knows where we’ll be by then’, in regard to Q3 2022.”

“Clearly the direction of the pandemic and of the vaccine programme are going to be instrumental in dictating the outlook for the economy into next year and beyond, but it’s likely that the RBNZ also will have one eye on the rate of exchange .”

“The RBNZ has previously been successful at knocking the worth of NZD lower by announcing pre-emptive or larger than expected rate cuts. this means a robust specialise in the NZD.”

“Despite current expectations that the economy is recovering, both the PM and therefore the secretary of state have recently warned exporters that trade with China might be impacted by the deterioration in relations between Wellington and Beijing. This also suggests headwinds for the economy and concerns about rate of exchange appreciation.”

“In light of the hawkish outlook on rates by the RBNZ we’ve raised our 3-month forecast for NZD/USD very moderately from 0.72 to 0.73.”