WELLINGTON, 25 September 2026 — New Zealand’s currency is in a noteworthy situation, where the expectations of a rise in the interest rate at home have risen, while the Kiwi has continued to decline in value. The Dollar vs Kiwi exchange reached 0.5650 on 24 September, the lowest level since the end of June after rising US yields made the Greenback more attractive.
According to FXStreet, the majority of the increase of the Kiwi in the July-September period has already disappeared.
At first glance, it would seem that New Zealand should benefit from currency appreciation due to the increase in the Official Cash Rate of the Reserve Bank of New Zealand (RBNZ) by 25 basis points to 2.75% on 2 September, which followed previous hikes in July and May. In turn, the markets were expecting a more than 75% likelihood of the increase to 3% on 28 October, as opposed to around 30% immediately after the announcement in September.
Nonetheless, it has been the saga of interest rates in the United States that has taken center stage. On September 16, 2026, the Federal Reserve increased the target range of the federal funds rate by 25 basis points to 3.75%-4.00%. By September 24, 2026, the yield from the 10-year Treasury bond crossed the figure of 5.15%, reaching its highest level since July 2007. Together, the above has increased the attractiveness of dollar-denominated financial instruments.
Here is another development: inflationary pressures are complicating the outlook of the RBNZ. New Zealand’s inflation surged to 4.1% annually in the June quarter of 2026, which the Reserve Bank of New Zealand attributed primarily to the rise in fuel prices owing to the conflict in the Middle East. The RBNZ projects inflation to remain above 3% for the remaining part of the year.
This means that oil is gaining currency status in financial markets. Brent crude oil was priced at over $106 per barrel on 24 September. January 2020 New Zealand was affected by increasing oil prices as it imports oil products; hence the rise in oil prices can heighten New Zealand’s inflation and influence interest-rate outlook.
The next market trial would be on 30 September when New Zealand announces its building permits for August and the US similar data for PCE inflation. It follows with two days of New Zealand’s consumer confidence exits, and employment statistics in the US, ISM manufacturing survey.
Hence, there’s an insinuation that the kiwis may be affected by the actions on the US dollar in world markets.
