NZD/USD rallies to near 0.5850 amid risk-on mood, RBNZ’s hawkish remarks

New Zealand Dollar Price Today

The table below shows the percentage change of New Zealand Dollar (NZD) against listed major currencies today. New Zealand Dollar was the strongest against the US Dollar.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.88%	-1.22%	-0.81%	-0.16%	-1.02%	-1.68%	-1.16%
EUR	0.88%		-0.35%	0.06%	0.72%	-0.14%	-0.82%	-0.30%
GBP	1.22%	0.35%		0.40%	1.08%	0.23%	-0.44%	0.05%
JPY	0.81%	-0.06%	-0.40%		0.66%	-0.18%	-0.84%	-0.35%
CAD	0.16%	-0.72%	-1.08%	-0.66%		-0.84%	-1.48%	-1.01%
AUD	1.02%	0.14%	-0.23%	0.18%	0.84%		-0.66%	-0.18%
NZD	1.68%	0.82%	0.44%	0.84%	1.48%	0.66%		0.49%
CHF	1.16%	0.30%	-0.05%	0.35%	1.01%	0.18%	-0.49%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the New Zealand Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent NZD (base)/USD (quote).

Market sentiment turns risk-on as the United States (US) and Iran have agreed on a two-week ceasefire. Earlier in the day, US President Donald Trump announced, through a post on Truth.Social, that he has suspended planned attacks on Iranian power plants and bridges, as Tehran has agreed to reopen the Strait of Hormuz.

S&P 500 futures trade 2.75% higher to near 6,800 in the European trade, reflecting strong investors’ risk appetite. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is down 0.85% to near 98.70.

In response, Iran has also delivered a 10-point proposal deal to the US, which would be started discussing on April 10 in Islamabad.

On the monetary front, the Reserve Bank of New Zealand (RBNZ) left its Official Cash Rate (OCR) steady at 2.25%, as expected. RBNZ Governor Anna Breman stated in the press conference that policymakers discussed hiking interest rates, but there were no strong advocates for tightening as of now. Breman added, “Neutral rate is a range with a midpoint at 3.0%,” which indicates that interest rate hikes in the near term are highly likely.

In the US, traders pare bets supporting interest rate hikes by the Federal Reserve (Fed) this year, as a significant decline in oil prices, following the US-Iran temporary truce, has de-escalated fears of persistently higher inflationary pressures.

According to the CME FedWatch tool, traders have priced out the possibility of the Fed delivering an interest rate hike this year, a sharp turnaround from at least one hike priced in after the war started on February 28.

RBNZ FAQs

What is the Reserve Bank of New Zealand?

The Reserve Bank of New Zealand (RBNZ) is the country’s central bank. Its economic objectives are achieving and maintaining price stability – achieved when inflation, measured by the Consumer Price Index (CPI), falls within the band of between 1% and 3% – and supporting maximum sustainable employment.

How does the Reserve Bank of New Zealand’s monetary policy influence the New Zealand Dollar?

The Reserve Bank of New Zealand’s (RBNZ) Monetary Policy Committee (MPC) decides the appropriate level of the Official Cash Rate (OCR) according to its objectives. When inflation is above target, the bank will attempt to tame it by raising its key OCR, making it more expensive for households and businesses to borrow money and thus cooling the economy. Higher interest rates are generally positive for the New Zealand Dollar (NZD) as they lead to higher yields, making the country a more attractive place for investors. On the contrary, lower interest rates tend to weaken NZD.

Why does the Reserve Bank of New Zealand care about employment?

Employment is important for the Reserve Bank of New Zealand (RBNZ) because a tight labor market can fuel inflation. The RBNZ’s goal of “maximum sustainable employment” is defined as the highest use of labor resources that can be sustained over time without creating an acceleration in inflation. “When employment is at its maximum sustainable level, there will be low and stable inflation. However, if employment is above the maximum sustainable level for too long, it will eventually cause prices to rise more and more quickly, requiring the MPC to raise interest rates to keep inflation under control,” the bank says.

What is Quantitative Easing (QE)?

In extreme situations, the Reserve Bank of New Zealand (RBNZ) can enact a monetary policy tool called Quantitative Easing. QE is the process by which the RBNZ prints local currency and uses it to buy assets – usually government or corporate bonds – from banks and other financial institutions with the aim to increase the domestic money supply and spur economic activity. QE usually results in a weaker New Zealand Dollar (NZD). QE is a last resort when simply lowering interest rates is unlikely to achieve the objectives of the central bank. The RBNZ used it during the Covid-19 pandemic.