FX.co ★ Kiwi Dollar Drops Amid Middle East Uncertainty

The New Zealand dollar slipped to $0.571, ending a two-day winning streak, as hopes for a swift resolution to the Middle East conflict faded. In a prime-time address, US President Donald Trump offered little clarity on how or when the war— which he had claimed would soon end — might be resolved, while cautioning that US forces could continue operations in Iran for the next two to three weeks. The ongoing tensions have unsettled global markets, heightening fears of renewed inflationary pressures and a slowdown in economic growth.

The Reserve Bank of New Zealand recently warned that rising oil prices, driven by the conflict, could push inflation higher and constrain household spending. Governor Anna Breman stated that the central bank would largely look through short-term inflation spikes, but indicated that a sustained increase in energy-related inflation could justify future interest rate hikes. The RBNZ is widely expected to leave rates unchanged at its meeting next week, with the implied probability of a rate increase in May dropping sharply to 25%, down from 60% a week earlier.