BofA Sees AUD/NZD at 1.18 by Early 2027 Amid RBNZ-RBA Policy Divergence

Bank of America (BofA) is maintaining its bearish view on the Australian Dollar to New Zealand Dollar (AUD/NZD) exchange rate, targeting 1.18 in early 2027.

The current AUD/NZD exchange rate hovered around 1.20 on Monday, with some analysts arguing that the Reserve Bank of New Zealand (RBNZ) should tighten further than the Reserve Bank of Australia (RBA), despite lingering Australian hike risks.

According to BofA strategists Isabel Hartstein and Oliver Levingston, 'the RBNZ is expected to continue hiking although clients differ on the number of hikes,' with some expecting a neutral Official Cash Rate (OCR) of around 3-3.5%.

The bank's preferred expression for the AUD/NZD rate is an AUD/NZD put spread with strikes at 1.1960 and 1.1850, although its broader forecast deck points to a rate of 1.20 in Q4 2026 and 1.18 in Q1 and Q2 2027.