A member of the Reserve Bank of New Zealand, Prasanna Gai, said that US tariffs are causing a drop in demand for New Zealand. This situation makes it harder for growth, which is already limited. As a result, the New Zealand Dollar fell. The NZD/USD pair decreased by 0.19%, hitting 0.5730. Compared to other major currencies, the New Zealand Dollar was weakest against the Japanese Yen, dropping 0.33%.

Currency Fluctuations

A data table showed how the New Zealand Dollar changed against major currencies today. Overall, it experienced mixed declines, falling against the USD, EUR, GBP, JPY, CAD, and AUD. Dhwani Mehta, from FXStreet in Mumbai, has over ten years of experience in analyzing global financial markets. The information in this article is for informational purposes only and is not a recommendation to buy or sell assets. The data and opinions from FXStreet do not represent the official views of the site or its advertisers. Legal notices remind readers to do thorough research before making any investment decisions. The Reserve Bank of New Zealand’s comments about US tariffs suggest a dim outlook for New Zealand’s economy. These tariffs target demand directly, complicating an already weak growth forecast. This reinforces a bearish view on the New Zealand Dollar for traders. Trade with the US is important, amounting to over NZ$20 billion in annual two-way trade as of early 2025. Recent data from Stats NZ shows that export volumes to the US fell by 4% in the third quarter of 2025, highlighting the real impact of these challenges. This trend may worsen as the tariffs affect the economy more deeply.

Economic Challenges

The RBNZ is in a tricky spot, similar to the slowdown seen in late 2023. Inflation remains high at 4.5% year-over-year, far above the central bank’s target. Meanwhile, the Official Cash Rate is already restrictive at 5.50%. This stagflation makes it hard for the RBNZ to lower rates to boost growth, leaving the NZD vulnerable. Given this context, we can expect the NZD/USD pair to weaken further, currently hovering around 0.5730. There is an increase in net short positions on the Kiwi dollar, with recent CFTC data showing speculative shorts at their highest level in over a year. This suggests that the market is already preparing for a continued decline. Traders dealing in derivatives should consider strategies to profit from this expected downturn and rising uncertainty. Buying put options on the NZD/USD offers a clear bet with limited risk. Alternatively, implementing bearish put spreads could be a cost-effective way to prepare for a gradual decline toward the 0.5600 mark in the coming weeks. It’s also noteworthy that the NZD is particularly weak against the Japanese Yen, as highlighted by the currency heatmap. In times of global economic uncertainty, the JPY tends to attract safe-haven investment. Therefore, a short NZD/JPY position may present a more profitable trading opportunity than merely shorting the NZD against the US Dollar. Create your live VT Markets account and start trading now.

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