Kiwi is still expected to appreciate gradually, taking it to 0.6300 by the end of 2024 and 0.6400 by the end of 2025.

Currency markets have shown themselves to be particularly sensitive to the ebb and flow of policy rate expectations this year, and that has been a source of volatility. While that pattern is likely to persist, a higher OCR is expected to support the Kiwi over the near term.

That said, we remain guarded about the global risk environment, with geopolitical tensions at the fore and the US still sporting the equal-highest cash rate (alongside NZ) across the so-called G10 markets. All that means is that the USD is unlikely to depreciate materially from here; hence our forecast for a milder NZD appreciation.