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Feb 26 - 12:55 PM

MUFG: RBNZ Meeting's Influence on NZD Outlook

By eFXdata  —  Feb 26 - 10:45 AM


MUFG highlights the significant performance of the NZD as the top high-yielding G10 currency in February, propelled by favorable FX carry trade conditions and a hawkish shift in the RBNZ's policy outlook. Increased market confidence this month suggests further rate hikes within the current tightening cycle, despite the policy rate already being the highest among G10 central banks at 5.50%. Although an immediate rate hike isn't anticipated at the upcoming RBNZ meeting, the market forecasts a likely hike in the first half of the year, with expectations set for a more explicit signal from the RBNZ regarding future rate adjustments.

Key Points:

  • NZD's strong performance in February is due to favorable carry trade conditions and hawkish RBNZ outlook.
  • Market expectations lean towards further rate hikes, with a potential signal from the upcoming RBNZ meeting.
  • RBNZ's previous stance indicated a possibility of further rate increases if inflation pressures intensify.


The upcoming RBNZ meeting is crucial for setting the tone for NZD's near-term trajectory. Should the RBNZ align with market expectations for additional rate hikes, it could sustain NZD's high-yield appeal. Conversely, failing to endorse a hawkish outlook might pose risks to NZD's recent gains. G10 FX carry trades are anticipated to continue thriving in the near term, contingent on the RBNZ's forthcoming policy signals.

MUFG Research/Market Commentary


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