The New Zealand dollar (NZD) has recently come under pressure as investors respond to diminishing market risk appetite, despite a notable uptick in domestic business confidence. Analysts note that the NZD's trajectory appears to be closely tied to broader market risk factors. If this trend continues, the ‘kiwi’ is likely to extend its current losses.
In terms of economic indicators, inflation in New Zealand reached 3.0% in Q3 2025, aligning with forecasts and hitting the upper limit of the Reserve Bank of New Zealand's (RBNZ) target range. This increase was primarily driven by higher electricity prices, rent, and local government taxes. In response to economic concerns and rising costs, the RBNZ has cut the official cash rate by 50 basis points to 2.5% and expects inflation to moderate to around 2% by mid-2026. The easing of home lending rules, beginning in December 2025, is also a significant policy move intended to improve market access for homebuyers.
On the other hand, the Indian rupee (INR) has experienced fluctuations, influenced by Reserve Bank of India (RBI) intervention aimed at stabilizing the currency amid rising pressures due to U.S. trade policies and increased gold imports. The RBI's substantial market intervention saw the rupee gain sharply, indicating a potential shift in market sentiment towards the currency, as indicated by recent options market changes.
Currently, the NZD to INR exchange rate stands at 50.77, which is 1.4% below its three-month average of 51.49. The NZD has traded within a stable range of 50.27 to 52.76 over this period.
Given these dynamics, forecasters suggest that continued market risk aversion may pose challenges for the NZD, while the INR benefits from signs of recovering sentiment post-RBI intervention. Businesses and individuals engaging in international transactions should monitor these developments closely, as fluctuations in these currencies could impact cost efficiencies significantly.
