BofA Sees Kiwi Boost from El Niño-Induced Trade Shock

Bank of America has identified New Zealand as a potential safe haven against the impact of El Niño on global food markets. The bank's strategist, Oliver Levingston, notes that historically, El Niño has been linked to significant crop losses in key exporting countries.

The current El Niño event poses growing risks to the global food supply, exacerbated by high fertilizer prices and prolonged disruptions in supply chains. Disruptions in the supply of resources for fertilizer production, linked to events in the Strait of Hormuz, further complicate the situation.

New Zealand's high dependence on agricultural exports means that it may benefit from a positive trade shock if global food supply problems persist. Bank of America expects markets to price in a more favorable outlook for New Zealand's terms of trade, potentially leading to a significant strengthening of the New Zealand dollar.