The Reserve Bank of New Zealand hints at earlier and larger rate increases, pushing the NZD/USD pair up 2% this week.
The NZD/USD pair rose 0.55% to 0.5967 in European trading on Friday, extending its weekly gain to 2%. The move follows RBNZ Governor Anna Breman’s remarks that interest rates may need to rise sooner and more sharply than previously expected to curb inflation.
This marks the second time this week Breman emphasized tighter monetary policy, citing persistent inflationary pressures. The RBNZ’s hawkish stance contrasts with other central banks, reinforcing the Kiwi’s strength against major currencies, particularly the Japanese Yen.
Markets are pricing in a higher terminal rate for New Zealand, supporting the NZD’s outperformance in the near term.