During October the NZD/USD pair jumped from 0.6914 to 0.7149. Economists at MUFG Bank see downside risks initially given rate expectations could correct but RBNZ rate hike plans are set to continue encouraging demand for the kiwi next year.
RBNZ stands out and stance will support NZD
“Given we see global growth challenges persisting as supply-constraints problems are only slowly resolved, and China growth slowing the degree of monetary tightening in New Zealand is now beginning to look excessive.”
“There is some risk here of some adjustment lower to the rates curve that could see NZD correct temporarily before advancing higher on a more sustained basis.”
“We are unlikely to get the RBNZ adjusting to the market pricing so we are forecasting some brief NZD correction before gradual recovery in 2022.”
