FX.co ★ New Zealand Dollar Holds Decline

The New Zealand dollar hovered near $0.581 after two straight sessions of losses, as markets weighed the implications of ongoing Middle East tensions for the country’s inflation outlook and broader economy. The US and Iran continued to trade strikes, while Yemen’s Houthi militants claimed attacks on two Saudi Arabian tankers in the Red Sea, sending oil prices sharply higher. The conflict has intensified inflation concerns but also increased downside risks to growth, given New Zealand’s heavy reliance on Middle Eastern oil imports, which leaves the kiwi exposed to potential supply disruptions and higher energy costs. Even so, the Reserve Bank of New Zealand is widely expected to deliver another 25-basis-point rate hike in September after second-quarter inflation exceeded forecasts, with the policy rate projected to reach at least 3.0% by year-end and peak around 3.5% by the middle of next year.