The New Zealand dollar (NZD) has recently faced downward pressure, reflecting a cautious market sentiment and a stronger U.S. dollar. Analysts suggest that the NZD's appeal may continue to diminish, particularly given the recent rise in the unemployment rate to 5.2% in Q2 2025 and declining employment levels. This data has fueled expectations of a potential 25 basis-point interest rate cut by the Reserve Bank of New Zealand (RBNZ) in its upcoming meeting, which could further undermine the currency.
Inflation expectations in New Zealand have shown slight stabilization, with two-year projections decreasing marginally from 2.29% to 2.28%, but still remaining within the RBNZ's target range. Traders are closely monitoring the implications of global trade tensions, including a 15% tariff recently imposed by the U.S. on New Zealand exports, which poses additional risks to the NZD.
Conversely, the Singapore dollar (SGD) is experiencing a somewhat different environment. The Monetary Authority of Singapore (MAS) has recently eased its monetary policy to address a downgraded GDP growth forecast of 0%-2% for 2025. However, economic indicators have shown a better-than-expected growth rate of 1.4% in Q2 2025, although there are signs of moderation expected in the latter half of the year. Core inflation has also declined significantly, further solidifying the MAS's decision to maintain its current monetary policy settings.
The recent price data reveal that the NZD to SGD exchange rate has fallen to 90-day lows near 0.7600, which is 1.2% below its three-month average of 0.7689. The currency pair has traded within a relatively stable range of 0.7600 to 0.7787, indicating limited volatility but suggesting bearish sentiment towards the NZD in the current landscape.
Overall, the NZD appears to be vulnerable to further downside, especially if risk-off sentiment prevails and the anticipated economic conditions unfold as projected. Investors and businesses looking at exchange rates may want to closely monitor these evolving dynamics between the NZD and SGD to make informed decisions regarding international transactions.
