NZD/USD to extend its fall as RBNZ rate hikes have to wait – ANZ

NZD/USD has dropped below the 0.69 level. The Reserve Bank of New Zealand (RBNZ) wants to hike, but if it has to wait, that does not bode well for the kiwi, in the opinion of economists at ANZ Bank.

There should be minimal damage to the NZ economy if the country locked down in time

“On the one hand it’s clear that the RBNZ needs to, and probably will, hike soon, and that having gone hard early, NZ will likely crush Delta. But on the other hand, Delta is escalating quickly (and likely at a rate few expected) and that’s shaken nerves.”

“Markets are now pricing in 85bp of hikes by May – that’s shy of the 100bp we expect, but then the risks are quite clearly skewed to less. What’s priced in is thus arguably lofty, so it’s hard to expect interest rates to add further support to the NZD, and odds are that good news could be some weeks off.”