The New Zealand dollar hovered around $0.595 on Tuesday after losing 0.4% in the previous session, as mounting tensions between the US and Iran dampened risk appetite. On Monday, Treasury Secretary Scott Bessent announced that the US would broaden the range of commercial activities in five key sectors of the Iranian economy that could be subject to secondary sanctions. Washington also unveiled new measures targeting nearly 60 entities, individuals, and vessels accused of supporting Iran’s oil revenues, weapons procurement, and cyber operations.
The kiwi was further pressured by weak domestic retail sales figures, which signaled softer consumer demand and cast doubt on the strength of New Zealand’s economic recovery, potentially limiting the scope for additional monetary tightening. Even so, markets broadly expect the Reserve Bank of New Zealand to deliver another interest rate increase in September, with inflation still running at elevated levels.