In May 2025, New Zealand’s exports totaled $NZ 7.68 billion, a slight drop from $NZ 7.84 billion in April. Imports increased slightly to $NZ 6.44 billion, up from $NZ 6.42 billion in the previous month. The trade balance for May was $NZ 1.24 billion. This was lower than April’s $NZ 1.426 billion but higher than the expected $NZ 1.06 billion. Over the year, the trade balance shows a deficit of $NZ -3.79 billion.

Currency Stability

Despite these trade shifts, the New Zealand dollar remained stable, following global political developments closely. Overall, we see a smaller trade surplus compared to April, yet it remains above market predictions. Exports decreased slightly while imports rose, which lowered the monthly balance but kept it positive. This indicates that demand for New Zealand’s goods is still strong, even as internal consumption grows with increased imports. However, the annual trade deficit is significant, indicating ongoing structural issues rather than just short-term changes. This could lead to pressure on interest rates or policy decisions later this year, depending on inflation trends and commodity prices. Interestingly, the smaller surplus did not significantly impact the local currency. Its stability reflects larger global issues, especially international tensions and shifts in expectations for major central bank actions abroad, which are influencing the market more than local trade data.

Market Implications

For us, the short-term focus is less about the main figures and more about how markets will react to future price data. The muted currency response suggests that derivative markets—particularly those sensitive to interest rates or foreign exchange—should stay alert but cautious. Bond and rate traders should avoid making hasty decisions. The current figures do not provide strong directional signals on their own. However, the positive surprise in the trade balance indicates that any short-term weakness in the Kiwi dollar is unlikely to stem from trade activity. Volatility expectations are currently low, but this could change quickly. If upcoming CPI or retail sales data affects Reserve Bank of New Zealand expectations, then the futures and swaps markets may need to adjust positions rapidly. We remain flexible, especially concerning shifts in forecasts for rate cuts later this year. Moving forward, we prioritize monthly momentum over annual comparisons, particularly when analyzing triggers in short-term derivatives. With ongoing geopolitical tensions and no major currency changes yet, there’s little need to alter existing strategies significantly. However, we continue to monitor changes in commodity-driven export sectors, as these have historically led to quick price adjustments when trends shift. Create your live VT Markets account and start trading now.

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