The New Zealand dollar is likely to be under pressure over the coming year. It is expected to fall to around 62c against the US dollar by June 2016, estimates Westpac. This is because of following factors.
The RBNZ is expected to deliver another rate cut next week. The economy is expected to face low inflation rate in near future that will cause the Reserve Bank to cut interest rates next year. As a result, the NZ dollar will face downward pressure.
At the same time, the economy will face pressure due to change in global interest rates, especially US interest rates. The Fed is expected to hike interest rate in this month; thereby US dollar will be stronger against other currencies including the NZD.
"Overall we think NZ export commodity prices will remain under pressure over the next year or so. While dairy prices in particular are likely to rise in response to sharply lower NZ dairy production as the El Nino weather pattern weighs on pasture growth and milk supply, we think Chinese consumer demand could remain muted over the year ahead with the Chinese economy forecast to slow further in 2016", forecasts Westpac.
