NZD/VND Outlook:
The NZD/VND is likely to increase as it is currently trading above its recent average and showing stronger fundamentals following a positive trend in dairy prices.
Key drivers:
• Rate gap: The Reserve Bank of New Zealand maintains a hawkish stance with a high Official Cash Rate, compared to Vietnam's lower rates, supporting the NZD.
• Risk/commodities: Due to favorable conditions in the dairy market, which is crucial for New Zealand's economy, the NZD is benefitting as commodity prices rise.
• One macro factor: New Zealand's recent trade deficit could create some headwinds, but overall conditions remain favorable.
Range:
Expect the NZD/VND to hold steady within its recent range, potentially drifting upwards.
What could change it:
• Upside risk: A significant increase in global dairy prices could further boost the NZD.
• Downside risk: Continued domestic liquidity pressures in Vietnam could weaken the VND against the NZD.
