FX.co ★ New Zealand Dollar Drops Further

The New Zealand dollar slipped toward $0.587 on Monday, extending its pullback from a more than five-week high as risk sentiment deteriorated amid renewed tensions between the US and Iran. Tehran briefly reopened the Strait of Hormuz on Saturday before closing it again just hours later, citing “repeated breaches of trust” by the US and the continuation of a US naval blockade on Iranian ports.

On the domestic front, recent data pointed to softer food inflation and moderating consumer spending, reinforcing expectations that the Reserve Bank of New Zealand will likely keep interest rates on hold for now. While price pressures are easing in some areas, underlying inflation remains a key concern, and the RBNZ has recently indicated it is ready to raise rates if core inflation shows signs of re-accelerating.

Investors are now focused on the upcoming first-quarter CPI release for clearer guidance on the central bank’s monetary policy trajectory.