The New Zealand dollar has appreciated gradually against the US dollar since it hit 0.6350 in mid-January. The NZD appreciated in spite of the RBNZ unexpectedly lowering rates during its March meeting. Moreover, RBNZ Deputy Governor Bascand and Governor Wheeler have stated again that loose monetary policy needs to continue due to the downside risk to inflation.
The country’s economy has been performing strongly, while the economic growth surpassed expectations in Q4 2015. Moreover, the economy’s trade balance also rebounded after exports rose sharply. But, milk prices continue to be weak. As the US Fed is likely to raise rates in June, NZD/USD is expected to trade lower to 0.64, said Lloyds Bank.
“From there, as long as inflation expectations pick up, the currency pair should track back to 0.68 by end-2016”, noted Lloyds Bank.
