Analysts at Kiwibank in New Zealand say the NZ dollar in undervalued:
- should end the year higher and closer to 75-to-77c.
- New Zealand has widening interest rate differentials, in the NZD's favour, thanks to a very assertive central bank, and near record terms of trade.
- We place fair value closer to 75c
On that divergence between the Federal Reserve and the Reserve Bank of New Zealand, this in brief from the report:
- Our view is the Fed will announce tapering by their November meeting, and do so slowly thereafter. Rate hikes are only likely sometime in the second half of next year.
- ... in stark contrast to the RBNZ’s. The RBNZ is chomping at the bit to start hiking rates. And an RBNZ rate hike in October would lead central banks around the world by a country mile.
Bolding mine, for emphasis if any more is needed.
- the RBNZ would have hiked in August. Although they're set to go in October
