Kiwi Dollar Hits Three-Month Low Amid Hawkish Rate Hike Expectations

The New Zealand dollar has been experiencing a tough September, hitting a three-month low of around $0.564 and on track for a monthly decline of more than 4%. This downturn is partly due to the Reserve Bank of New Zealand's signal that they are less hawkish on interest rates than markets had anticipated.

The kiwi was further weighed down by a strengthening US dollar amid rising expectations for more Federal Reserve rate hikes. However, recent oil price spikes have increased upside risks to inflation, prompting traders to bet on another rate hike in October.

Reserve Bank Governor Anna Breman warned that persistently high oil prices could push near-term inflation above the central bank's latest forecast.