The New Zealand dollar rose to around $0.557 on Tuesday, following recent sharp declines after President Trump signaled openness to “fair deals” if other countries make concessions.
However, a bearish outlook persisted as he also refused to pause tariffs and threatened further increases on Chinese imports.
This poses a significant risk to New Zealand’s export-driven economy, particularly since China, its largest trading partner, is already facing steep tariffs on nearly all goods, with total duties reaching 54%.
Meanwhile, domestic attention turns to the Reserve Bank of New Zealand’s policy decision on Wednesday, with a widely expected 25bps cut likely to bring the official cash rate down to 3.5%.
The move comes amid easing inflation, slowing economic growth, and emerging signs of labor market weakness.
There is also speculation that escalating global trade tensions could lead to a deeper 50 bps cut, with expectations of up to 100 bps of further easing in 2025.