Our currency forecasts assume a further gradual appreciation of the Kiwi over coming quarters, taking it to 0.63 by year-end, and 0.65 by the end of 2024.

The forecast is based on our expectation of USD weakness as the US tightening cycle comes to an end and the USD reverts to our analytical estimate of fair value. We see fair value at around 91.50 DXY terms.

Although we like to anchor our forecasts to measures of fair value, we are mindful that the market has been unwilling to embrace the idea of a substantially weaker US Dollar yet. That likely reflects broad economic resilience there (which is somewhat surprising, given how aggressively the Fed has tightened policy) and a sense that fragilities elsewhere (especially in China) add to the appeal of the US Dollar.