Image © David McKelvey, reproduced under CC licensing.
NZD is poised for gradual appreciation through 2026, says ANZ.
The New Zealand dollar is poised for gradual appreciation through 2026 despite recent softness, supported by improving local fundamentals and a return to fair value, ANZ said in its latest FX market update on Monday.
The NZD has retreated from post-Easter highs, with NZD/USD failing to sustain levels above 0.60 in May. NZD/AUD has similarly pulled back to around 0.92 after touching 0.9388 in late April.
“While global themes have dominated so far this year, local factors are likely to take the reins,” said David Croy, Senior Strategist at ANZ. “These include relative interest rates, the outlook for export prices, fiscal policy, labour markets and productivity.”
ANZ's fair value model places NZD/USD just above 0.62, compared to a spot level around 0.59, suggesting the Kiwi remains undervalued. “The Kiwi is about halfway between our measure of fair value and its lower standard deviation band, which does suggest that it is ‘cheap’,” Croy said.
The Reserve Bank of New Zealand is expected to cut the Official Cash Rate to 2.50% by year-end, down from the current 3.50%, as disinflation persists and economic growth remains soft. Nevertheless, New Zealand’s solid credit rating, relatively high bond yields, and improving fiscal position offer tailwinds.
Above: NZD performance against the G10 in the past month.
Consensus projections for the next four quarters based on our survey of the world's tier-1 investment banks.
Access the full forecast →
“The gravitational pull to fair value and higher commodity prices are underpinning our forecasts for gradual NZD appreciation over 2026,” Croy added.
Speculative positioning in NZD futures remains net short but has eased since April, potentially clearing the way for further gains if macro data surprises to the upside. Correlation with commodity prices has also resumed, reinforcing the Kiwi's link to global trade trends.
