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New Zealand Dollar Losses Set to Deepen Even as RBNZ Hikes Rates

  • Market pricing in 157 basis points of RBNZ rate hikes in 2022
  • New Zealand’s 4Q inflation seen climbing to highest since 1990
Pedestrians walk past cafes and restaurants in Auckland, New Zealand.

Pedestrians walk past cafes and restaurants in Auckland, New Zealand.

Photographer: Brendon O'Hagan/Bloomberg

The New Zealand dollar is turning vulnerable to further declines despite expectations of aggressive policy tightening from the nation’s central bank this year.

That’s because the rates markets have fully priced in the bulk of the Reserve Bank of New Zealand’s rate hikes in 2022, leaving the kiwi susceptible to losses amid risks that the Federal Reserve’s policy tightening could turn even more hawkish.