Exclusive Financial Report: Outlook for NZD/USD
2025-04-01
The Reserve Bank of New Zealand (RBNZ) is expected to cut interest rates by 0.25% in both the April and May meetings, with one more rate cut expected later in the year.
Although the New Zealand dollar has been affected by external factors such as U.S. tariff policies, it is unlikely to depreciate further due to market expectations of economic recovery.
Today, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr announced his resignation for the remainder of his three-year term. In a statement, he mentioned, "With the Consumer Price Index returning to the central bank’s target level, and the economy progressing towards cyclical recovery, I have decided to step down." The Deputy Governor, Hawkesby, has now taken over as Governor, and starting in April, Finance Minister Grant Robertson will be appointed as the interim Governor, with a maximum term of six months. The exact reasons for Governor Orr’s resignation have not been disclosed, but it is believed that tensions arose between Orr's policy actions and the current government, which had criticized his aggressive interest rate hikes in response to inflation following the COVID-19 pandemic. Although the resignation occurred midway through his second term, its impact on financial markets appears to be minimal for now.
New Zealand’s economy entered a recession after two consecutive quarters of negative growth from July to September last year. Since August, the Reserve Bank has cut rates by a cumulative 175 basis points. While personal consumption rebounded in the October-December 2023 period and the economy began to recover, the RBNZ is expected to cut rates by 25 basis points in both the April 9 and May 28 meetings. If the economic outlook proceeds as expected, the central bank may slow down the pace of rate cuts, with the policy rate projected to fall to around 3% by the end of 2025.
In March, the USD and JPY dominated market movements. Due to external factors such as U.S. tariff policies, the NZD/USD exchange rate hovered around $0.58, while the NZD/JPY exchange rate encountered resistance near 87 yen. However, the New Zealand Business Confidence Index for March, released today, stood at 57.5, showing a sustained high level, especially with improvements in manufacturing sector confidence, boosting expectations for economic recovery. Going forward, the key focus will be whether the pace of rate cuts will slow down, with the release of the first-quarter Consumer Price Index on April 17. In the short term, the New Zealand dollar is unlikely to depreciate further, with the exchange rate against the USD expected to fluctuate between 0.55 and 0.60, while the exchange rate against the JPY is likely to range near the 200-week moving average of 85.56 yen.
Although the New Zealand dollar has been affected by external factors such as U.S. tariff policies, it is unlikely to depreciate further due to market expectations of economic recovery.
Today, Reserve Bank of New Zealand (RBNZ) Governor Adrian Orr announced his resignation for the remainder of his three-year term. In a statement, he mentioned, "With the Consumer Price Index returning to the central bank’s target level, and the economy progressing towards cyclical recovery, I have decided to step down." The Deputy Governor, Hawkesby, has now taken over as Governor, and starting in April, Finance Minister Grant Robertson will be appointed as the interim Governor, with a maximum term of six months. The exact reasons for Governor Orr’s resignation have not been disclosed, but it is believed that tensions arose between Orr's policy actions and the current government, which had criticized his aggressive interest rate hikes in response to inflation following the COVID-19 pandemic. Although the resignation occurred midway through his second term, its impact on financial markets appears to be minimal for now.
New Zealand’s economy entered a recession after two consecutive quarters of negative growth from July to September last year. Since August, the Reserve Bank has cut rates by a cumulative 175 basis points. While personal consumption rebounded in the October-December 2023 period and the economy began to recover, the RBNZ is expected to cut rates by 25 basis points in both the April 9 and May 28 meetings. If the economic outlook proceeds as expected, the central bank may slow down the pace of rate cuts, with the policy rate projected to fall to around 3% by the end of 2025.
In March, the USD and JPY dominated market movements. Due to external factors such as U.S. tariff policies, the NZD/USD exchange rate hovered around $0.58, while the NZD/JPY exchange rate encountered resistance near 87 yen. However, the New Zealand Business Confidence Index for March, released today, stood at 57.5, showing a sustained high level, especially with improvements in manufacturing sector confidence, boosting expectations for economic recovery. Going forward, the key focus will be whether the pace of rate cuts will slow down, with the release of the first-quarter Consumer Price Index on April 17. In the short term, the New Zealand dollar is unlikely to depreciate further, with the exchange rate against the USD expected to fluctuate between 0.55 and 0.60, while the exchange rate against the JPY is likely to range near the 200-week moving average of 85.56 yen.