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New Zealand dollar seen strengthening versus euro on rate-gap bets
Macquarie predicts the kiwi could rise as much as 3.2% against the euro over the next three months, with the move hinging on whether NZ inflation supports further Reserve Bank tightening.
The New Zealand dollar is expected to strengthen against the euro to its strongest level in more than a year as investors price a wider interest-rate gap, according to strategists cited by LiveMint Markets.
Macquarie Bank forecasts the kiwi could climb as much as 3.2% versus the euro over the next three months, and it expects the Reserve Bank of New Zealand to lift its benchmark rate by more than a percentage point over the next year, compared with about 75 basis points of tightening from the European Central Bank.
The outlook is tied to whether New Zealand inflation stays persistent enough to justify additional RBNZ moves, while the ECB left its key rate unchanged last week and said it would monitor incoming economic data.
Strategists also pointed to the euro’s near-term pressure, including expectations that any ECB September hike could be the end of its tightening cycle, as well as the risk that higher oil prices from the Middle East conflict could keep inflation risks elevated.