Friday, March 29, 2024

ANZ pares back dollar easing

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ANZ Bank still expects a weakening dollar but says the fall won’t be as far as it was thinking a few weeks ago. Earlier forecasts were based on rising United States Fed interest rates and an easing track by the Reserve Bank, ANZ’s FX/rates strategist Sandeep Parekh said.
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“Now the Fed is firmly on hold and the only drag will be New Zealand rate cuts.”

The ANZ expects the RBNZ to cut the OCR in August and twice more after that while the Fed already has higher rates and is expected to remain on hold.

It now calls the kiwi at US$0.65 by the end of June from a previous forecast of 0.62. The year-end forecast is US$0.64 from 0.61 and for March next year at 0.63 from 0.61.

Rural commodity in-market prices and farmer returns remain at high levels but the kiwi dollar still needs to come down because a TWI around the 75 level is uncomfortable for an export-led economy, Parekh said.

Lower levels for the kiwi against other major currencies are also slimmed-down, except for sterling, where he calls for a fall to stg0.48 in June and a year-end 0.47, on a reasonable Brexit outcome. – Alan Williams

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