New Zealand Dollar Plunges 0.56% Against USD Amid Dovish Policy Shift

The New Zealand dollar (NZD) took a hit on August 13, plummeting by 0.56% against the US dollar.

This decline was largely driven by a dovish repricing of Reserve Bank of New Zealand policy expectations following the release of its quarterly survey of expectations.

The survey revealed that two-year inflation expectations cooled to 2.34% in the third quarter, moderating one-year forward inflation projections significantly.

This softer reading reduced market expectations for aggressive rate hikes from the RBNZ, eroding domestic yield support and prompting institutional investors to pare back long kiwi positions.