The New Zealand dollar (NZD) has faced significant downward pressure recently, especially characterized by a decline in sentiment and risk aversion in the markets. Analysts note that the NZD plunged as a result of the Reserve Bank of New Zealand (RBNZ) cutting interest rates to a three-year low of 3.00% on August 20, 2025. Expectations for further cuts, potentially down to 2.55%, along with a softening labor market, have exacerbated the currency's decline, contributing to a reduction of approximately 1.2% in the NZD's value.
Additionally, trade tensions have flared with the United States imposing a 15% tariff on New Zealand exports as of August 1, 2025. This escalation poses risks to New Zealand's export-driven economy, further weighing on the NZD. The risks are heightened by global economic uncertainty, leading investors to favor safer assets over the risk-sensitive Kiwi.
In contrast, the Singapore dollar (SGD) has shown some resilience despite facing its share of challenges. The Monetary Authority of Singapore (MAS) adjusted its policy in April to ease monetary conditions amidst global trade uncertainties, followed by a decision in July to maintain its existing stance following better-than-expected Q2 economic growth. Singapore's GDP grew by 1.4% quarter-on-quarter, helping the country avoid a technical recession and supporting the SGD in the midst of tense trade relations, including a recent 10% tariff on Singapore goods imposed by the U.S.
Currently, the NZD to SGD exchange rate is at 0.7577, which is 1.0% below its three-month average of 0.7657. The NZD has traded within a stable range of 0.7484 to 0.7787 over that period. Given the combined factors of domestic economic challenges in New Zealand and a relatively stronger performance from Singapore, forecasters suggest continued volatility for the NZD against the SGD is likely, with downward pressure persisting unless significant improvements occur in key economic indicators.
