New Zealand’s dollar is expected to reach its strongest level in over a year against the euro, driven by a widening interest rate gap between the two regions, strategists said on July 27. Macquarie Bank Ltd. forecasts the kiwi will rise as much as 3.2% against the euro over the next three months, reflecting anticipated monetary policy divergence.
The Reserve Bank of New Zealand (RBNZ) is projected to increase its benchmark interest rate by more than one percentage point over the next year. In contrast, the European Central Bank (ECB) is expected to tighten monetary policy by about 75 basis points during the same period, according to overnight index swaps data cited by Bloomberg and reported by livemint.com. Westpac Banking Corp. and Canadian Imperial Bank of Commerce also expressed bullish views on the kiwi’s outlook.
This expected rate differential is significant because higher interest rates typically attract foreign capital, boosting the currency’s value. The RBNZ’s more aggressive tightening stance compared to the ECB reflects differing economic conditions and inflation pressures in New Zealand and the Eurozone. The forecasted 3.2% appreciation would mark a notable shift in currency markets, impacting trade and investment flows between the two regions.
The kiwi’s projected rise against the euro is set to unfold over the next three months, with the currency reaching its strongest point since mid-2025, according to Macquarie Bank’s forecast detailed on July 27.