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The New Zealand dollar (NZD) is expected to remain under pressure in the near term, with analysts at ANZ Research maintaining a mid-year target of 0.55 against the U.S. dollar.
However, a gradual recovery is forecast in the second half of 2025 as global risk sentiment stabilises and market positioning supports a rebound.
NZD) remained under pressure in February, marking its lowest monthly close since 2009 as global risk sentiment and U.S. dollar strength weighed on the currency
“February was another tough month for the NZD, closing at 0.5598 against the USD, its weakest level in over a decade,” said David Croy, Senior Strategist at ANZ. “While intra-month volatility saw some temporary gains, the broader trend remains negative.”
The NZD/USD hit a low of 0.5516 during the month, but analysts noted that it did not breach pandemic-era lows of 0.5470. Against other G10 currencies, the Kiwi was the second-worst performer, reflecting broader weakness in non-USD currency pairs.
Key Drivers of NZD Weakness
A combination of U.S. economic resilience, higher U.S. interest rates, and ongoing geopolitical uncertainty has kept demand strong for the U.S. dollar, limiting any meaningful recovery for the NZD.
“Markets are currently being driven by fear and uncertainty rather than long-term fundamentals,” said Croy. “Despite expectations that tariffs might hurt the U.S. economy in the long run, short-term sentiment continues to favour the greenback.”
New Zealand’s economic outlook remains soft, further weighing on the currency. Low local interest rates following the Reserve Bank of New Zealand’s (RBNZ) 50 basis-point rate cut have made the Kiwi less attractive. “The RBNZ leadership change has been largely ignored by markets, as continuity in policy is expected,” noted Croy.
Outlook and Forecasts
ANZ Research has revised its mid-year NZD/USD target to 0.55, citing persistent downside risks but anticipating a gradual recovery towards fair value of 0.62 by year-end. The Kiwi’s movement will remain highly sensitive to global risk sentiment and shifts in U.S. Federal Reserve policy.
“The currency is currently trading near the lower bounds of our fair-value model,” said Croy. “While that suggests it is cheap, without a fundamental catalyst, a sustained rally remains difficult.”
Exchange Rate Forecasts (End of March 2025):
NZD/USD: 0.55
GBP/NZD: 2.20
EUR/NZD: 1.82