WELLINGTON: In a 2016 exchange rate forecast note to clients CBA say they are also upgrading their kiwi dollar forecasts against the US dollar.
No doubt, it will be the upgrades to this rate that will have impacted on the changes made to the GBPNZD cross.
“We have increased our NZD/USD forecasts. The main reasons for a higher NZD/USD are higher New Zealand swap rates and stronger-than-expected demand for New Zealand assets, which is generating support for the NZD,” say CBA.
The New Zealand dollar has not enjoyed a strong start to 2016, and this theme could still play out in the over coming weeks it is suggested.
The pound to New Zealand dollar exchange rate has taken advantage of negative global financial sentiment to push higher to back above 2.20.
The New Zealand to US dollar rate has meanwhile collapsed from above 0.68 in December to below 0.65 at the present.
“We still project NZD/USD will decline from current levels in the near-term, though from a higher level than earlier forecast,” say Commonwealth.
With regards to New Zealand monetary policy – arguably the most important driver of the NZ dollar – CBA still expect the Reserve Bank of New Zealand to cut the official cash by another 50 basis points in 2016.
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