During June, the New Zealand dollar depreciated against the US dollar from 0.6502 to 0.6227. Economists at MUFG Bank expect the NZD/USD pair to remain under pressure in this quarter before turning back higher by the end of the year.

NZD to gradually appreciate from Q4 onwards

“As fears mount globally over recession risks, currencies like NZD that are further along the tightening path could suffer. The RBNZ is committed to lifting rates toward 4.00% although similar to other G10 countries, will likely not deliver what current guidance suggests.”

“Of benefit for NZD will be a favourable terms of trade with global food prices rising while we also expect a gradual improvement in China’s economic growth.”

“Beyond the likely period of tighter financial conditions in Q3, we see reason for NZD to gradually appreciate from Q4 onwards.”