The New Zealand dollar (NZD) is facing downward pressure as investor sentiment shifts amidst cooling market risk appetite, despite a recent upturn in domestic business confidence. Analysts indicate that the NZD’s trajectory is closely tied to ongoing risk dynamics. If the adverse market mood persists, the kiwi could see further declines.
Recent economic indicators from New Zealand present a mixed picture. Inflation hit 3.0% in Q3 2025, aligning with the upper boundary of the Reserve Bank of New Zealand's (RBNZ) target range. This spike is attributed to rising costs in essential sectors such as electricity and housing. In response to economic challenges, the RBNZ has cut the official cash rate by 50 basis points to 2.5%, signaling a more accommodative monetary stance with expectations for inflation to stabilize around 2% by mid-2026. Additionally, the RBNZ's decision to ease home lending rules may contribute to a gradual recovery in domestic demand, although the immediate effect on currency strength remains uncertain.
In contrast, developments in Switzerland suggest a more stable outlook for the Swiss franc (CHF). The Swiss National Bank (SNB) has increased its foreign currency purchases, reflecting concerns over the franc's appreciation due to external pressures, including U.S. tariffs. Maintaining a policy rate at 0.00% is expected to continue, providing a supportive environment for the CHF. However, Switzerland is grappling with deflationary pressures driven by a strong currency, which complicates the economic landscape.
Recent market data shows the NZD to CHF rate at 0.4601, which is 1.6% below the three-month average of 0.4676. The exchange rate has remained within a stable range of 6.3%, indicating moderate fluctuations between 0.4538 and 0.4825.
Overall, while forecasts for the NZD reflect vulnerabilities linked to domestic inflation and monetary policy, the CHF offers relative stability amid external economic stresses. Market participants should remain vigilant, as shifts in risk sentiment and economic developments in both regions could influence exchange rates in the near term.
